Meme hype may deter women from investing
The author is a fixed income portfolio manager at Barksdale Investment Management and co-author of “Undiversified: The Big Gender Short in Investment Management”
“What is a day trader? My godson calls me to ask me this just after his 18th birthday, newly in possession of a Schwab brokerage account filled with money for high school graduation.
When I define the term, he confesses to me that, yes, he became a day trader with a paper profit of $ 1,000 in his first week as a legal adult. I say “confess” because he did what I advised him not to do: browse the Reddit forums and bet on stocks that dominate them, like retailer GameStop.
My godson won’t go to the hospice if he bet badly. I doubt most day traders are. And I’m sure he’s learning a lot from his experience.
But as someone who makes a living from investment management, I worry about the broader impact of the day trading hype around so-called memes stocks.
It perpetuates a number of myths about the ‘real business’ very different from investment management which in turn perpetuates the lack of gender diversity in the industry. Breathtaking stock meme coverage indicates investing is the preserve of high testosterone, risky, fence-swaying ‘brethren’ who scream in online forums and go to war with wealthy fund managers speculative. This suggests that successful investors rely primarily on gut feelings, not analysis.
The reality, of course, is very different. As a portfolio manager, I can personally attest to the fact that the majority of us men and women are on the whole analytical, heavy and cheesy people who would not consider buying a stock or a bond. without having done extensive research on the company. It would be reckless otherwise, let alone a breach of fiduciary duty to clients.
Bets focused on very few stocks by stock traders even defy the principle of diversification of Investing 101. The day trading approach requires a huge appetite for risk and acceptance of the daily and unpredictable fluctuations in your market. savings.
Research shows that women tend to take a different approach to risk. That’s not to say they can’t take it – just that they tend to have a more balanced view of risk-return.
I’m worried that a young lady reading the coverage of the stocks meme might conclude that she’s no match for hyped traders and / or has no interest in working in an industry dominated by this personality type.
Women are already discouraged from getting into fund management in large numbers. The gender imbalance in the industry is serious.
To quote a few figures, only 10 percent of U.S. portfolio managers (the people who invest your money if you own a mutual fund or ETF) are female, according to one Morningstar Research Report. And only 16% of financial advisers (the people who recommend mutual funds and ETFs to you) are women.
Interviews with investment management often refer to actual investment experience, which is a confusing way of selecting candidates. In addition to the obvious investable wealth base required, which eliminates people who grew up in modest homes, how can this precondition be verified?
Let’s say a woman enrolls in an MBA program, the traditional path of an investment manager’s career path. His interest in investment work could be piqued. Still, it could be derailed by a recruiting process that almost always asks candidates about their investment experience. She could interview alongside the serious young man who tells the story of his “ten-bagger” – an investment that increases in value by 10 times – on a stock popular with memes crowds such as the AMC Entertainment movie channel.
And then the hype about what it takes to be a day trader resurfaced. A well known Harvard Business Review Study suggests that women apply for a job only if they have 100% of the qualifications, compared to 60% for men. This may suggest that a job for which a “killer instinct” is presented as a qualification will necessarily attract fewer women.
Much more attention needs to be paid to the huge gender and racial inequalities in the ranks of portfolio managers and investment analysts than releasing the umpteenth equity coin meme. Taken as a whole, this coverage of memes likely contributes to these inequalities by discouraging women and people of color from joining the investment industry.
My last call from my downline was another update on his paper profits (up 45% or $ 4,500 now). He was with one of his classmates who is also a self-proclaimed day trader. On a whim, I asked them if they knew any female day traders. They said, “Uh, no. ”
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