Warren Buffet is undoubtedly the best man when it comes to making Investments. It is popularly said that his hands have a Midas touch and whichever investments he makes; it earns him a healthy profit. As per Forbes, Warren Buffet’s wealth has been estimated at a whopping 50 billion dollars (As of March 2011) and most of this wealth has been made through Investments
But how does Warren Buffet do so? What is his Investment style that makes him unique and which no-one has been able to replicate since decades? A recent study conducted by LouAnn Lofton who studied the habits of the world’s most renowned investor has revealed that Warren Buffet’s investing style can be correlated to that of a woman. Yes, you read it right, Warren Buffet has a Feminine Investing Style.
The Researcher of this study has also authored a book on this study by the name – ‘Warren Buffet Invests like a Girl’. The Team of Chartered Club had the privilege of reading this book and some of the key points of the book which substantiate the fact that Warren Buffet Invests like a Girl have been shared below:-
Warren Buffet has time and again reiterated that it is the Temperament and not the Intellect that makes you a good long term investor. And a look back at the studies conducted on men and women in the past 10 years reveals that women tend to naturally have this temperament that creates Long Term Investing Success.
Men are more emotional when it comes to investing. They trade too much and view investing as a game. They are driven by ego, overconfidence and testosterone. They’re more likely to trade on hot stock tips and without doing enough research. Men were more likely to panic and sell at the bottom—at the exact wrong time. They were unable to control their emotions. Whereas women tend to be calmer and patient with a longer-term outlook.
Buffett is renowned for his research. He reportedly reads five newspapers a day and countless annual reports. Irrespective of how much knowledge he has about a company, he is always on the lookout for more knowledge.
And the same is the case with Women who tend to spend more time researching their Investments and tend to take less risk than men do. This prevents them from chasing hot tips and prevents them from whims. Women are also more likely to seek out Information that challenges their assumptions.
3. Time Horizon
Warren Buffet has always been a keen advocator of the fact that it is always advisable to let your Investment grow. He does not believe in Trading but rather focuses on Investing and prefers to Buy and Hold on to his Shares rather than looking out for some quick bucks by trading on short term tips.
And when the author compared the Investing Style of various men and women, the conclusions revealed that men trade 45% more often than women do, and although men are more confident Investors, they are more susceptible to becoming overconfident. By trading more often – and without much research – men end up reducing their net returns and increase Transaction Costs and Capital Gains taxes.
4. Trust your decisions
Warren Buffet believes in the fact that if after researching, you think it is a good time to sell while others think it is a good time to buy – always rely on your Research as others may be wrong.
And this is a trait which is commonly found in females. They aren’t susceptible to peer pressure as men are, which results in a more level-headed, patient approach to Investing.
The Book – ‘Warren Buffet invests like a Woman’ is now available on all leading stores and is also available on Amazon.com for $25.99