Disrespecting, Disappointing, and Disheartening Awesome Investors

This week, the five-year anniversary of the financial crisis is creating buzz and sparking memories, including here at The Motley Fool. One issue may be running under the radar, though, and it may dis(respect) some of the best minds on Wall Street.

On Wall Street, the financial crisis may have caused a different kind of shake-up than the ones many of us hoped for, or even expected. For one reason or another, many females ended up out of Wall Street's door. Worse, many high-ranking female managers made the first cut -- pink-slip wise -- during the crisis. Apparently, a lot of factors resulted in a diversity drain on the Street.

The purge
Recent Bloomberg Businessweek and The Atlantic articles explore Wall Street's female exodus. The Bloomberg Businessweek post gives a striking introduction: "The financial crisis that began almost exactly five years ago marked one of the most thorough purges of women from the upper levels of Wall Street in memory."

Sadly enough, the stereotype of Wall Street's best, most engaged minds may be a largely engrained attitude few would publicly state. How many silently believe that? This past summer, controversy flared when hedge-fund manager Paul Tudor Jones made some comments aloud during what was meant to be a gathering closed to the media. A few highlights: motherhood is a "killer," and, "As soon as that baby's lips touched that girl's bosom, forget it."

The tragedy of losing female investors has fallen on deaf ears for too long. There's nothing wrong with female investors' returns. They certainly aren't worse than men's investing performance, and some studies show they're even much better. Wall Street and regular investors likely have some elements of the art and science of investing all wrong, and women have plenty of advantages.

Analysis from Financial Analyst Journal reveals, "Women's analysts' recommendations demonstrated a better rate of return compared to risk versus the men's." Regardless, an analysis of brokerage firms between 1994 and 2005 revealed that only one in six analysts at all the major brokerages were female.

Where the girls are (delivering returns under the radar)
There's a reason why the Motley Fool is "motley." We embrace many viewpoints and different types of people in our community and subscriber base. As for women in investing, my colleague LouAnn Lofton wrote an entire book on the topic: Warren Buffett Invests like a Girl.

Studies show that many women possess the oft-sought "temperament" Buffett has pointed out makes successful investors. And, of course, Buffett is no fly by-night trader -- he's the most respected modern investor.

Some of Lofton's important points:

  • Women deeply research their stock ideas and investments.
  • Men trade 45% more than women do, a frenetic habit that actually shrinks their net returns.
  • Not to be rude to gentlemen, but women's lack of testosterone is a feature, not a flaw.

Testosterone increases risk-taking behavior. That can nail investment returns, not to mention business well-being. And we do know that the insane levels of risky behavior -- and related groupthink -- helped build the financial crisis.

When it came to all the questions during the chaotic crisis, letting intelligent and talented women slip out of the ranks -- not to mention forcing them out -- was not the right answer.

Setting good examples
More females are taking high-ranking, high-stakes positions, even if overall progress for women has remained sadly slow. Marissa Mayer was brought in as Chief Executive Officer of Yahoo! (NASDAQ: YHOO  ) , a company that has struggled for years. Earlier this week, the stock reversed a downward trend that existed even before the financial crisis. It has tiptoed above the $30 mark.

Of course, stock price isn't all, and shouldn't be. Mayer also shared some impressive news recently that's a good sign for revitalization of the real fundamental business. Yahoo!'s online presence has recently clocked a 20% surge in monthly users -- a total 800 million. Mayer is showing positive signs about reversing Yahoo!'s fortunes.

PepsiCo's (NYSE: PEP  ) Indra Nooyi has made visionary moves to evolve Pepsi's business for the long term, and building trends, like healthier food and beverage choices. Regardless, this past summer, Trian Fund Management's head Nelson Peltz agitated in favor of splitting Pepsi's beverage and snack foods divisions, and acquiring Mondelez (NASDAQ: MDLZ  ) , Kraft's international business spin-off that has experienced financial choppiness. He pushed for the split-up to begin with.

Mondelez, which also happens to have a female CEO, Irene Rosenfeld, has compiled rebuttals to Peltz's recommendations. Pepsi doesn't seem responsive to the idea either -- not surprisingly.

Dissecting the big dis
Obviously some women are leading the charge, revealing their smarts, long-term visions, practical views of risk management, and real-value creation. Although some forces may seek to downplay their temperament for business and investing, the more that join in, the better the future will be.

The Atlantic's in-depth piece digs deeper into reasons why women flee Wall Street. Some reasons aren't even nefarious, but illustrate the complexities of change and progress. Most people know that Wall Street's intensity and pace doesn't always make for a rewarding personal life. That can relate to the strongly male-dominated atmosphere, but also relates to choices involving a better work/life balance.

The article outlined intense pressure, long hours, wheeling, dealing, and networking. Women can face difficulties fitting in as change plays out. Even though some men truly have no personal problem with female colleagues, others may not know how to approach or socialize with their female peers. Sometimes, unfair situations simply involve current realities. Of course, they can change. The thing is, change is difficult to achieve when there's such an understood status quo.

Challenges for all of us
My first response to the articles was anger, and the sadness of societal and cultural unfairness and myopia that fears instead of embraces "difference." Still, I want to believe that, as more women do move forward in formerly male-dominated industries like Wall Street, that more problems will be ironed out, including greater recognition that cognitive diversity makes for robust business and the ability to invest in much stronger companies.

Through corporate governance failures, and management-centric cultures, all shareholders -- of all genders, races, lifestyles, shapes, sizes, lifestyles, and so forth -- are also too often disrespected, whether it's purposely or not. When merit goes unnoticed, we fail; that's why topics like this one are important to everyone, including investors. Eliminating the groupthink, embracing change and forgetting about what supposedly "always worked in the past," and looking at reality, are all important pieces of investing -- and life.

Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.

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Read/Post Comments (12) | Recommend This Article (13)

Comments from our Foolish Readers

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  • Report this Comment On September 15, 2013, at 1:39 AM, talotu wrote:

    <i>Marissa Mayer was brought in as Chief Executive Officer of Yahoo!, a company that has struggled for years.</i>

    Who was the CEO for much of that struggling? Carol Bartz.

  • Report this Comment On September 15, 2013, at 5:52 PM, gskinner75006 wrote:

    "Not to be rude to gentlemen, but women's lack of testosterone is a feature, not a flaw". I don't think ones genital makeup or their particular hormone profile has a lot to do with how well they can find success, or failure.

  • Report this Comment On September 16, 2013, at 11:10 AM, jlclayton wrote:

    As a woman with 4 daughters, the problem I have is with high school curriculum and some aspects of the women's lib movement. In high school I was encouraged to take business/secretarial courses, while the boys were encouraged to take shop classes. I believe that boys and girls should take the same amount of credits in each of these so that the girls can realize what they are capable of and the boys can learn to become proficient in basics that will help them in almost every career.

    As far as the women's lib movement, I saw a comparison once between a tree trimmer and a secretary. They showed how both of these used the same level of skills, however, the secretarial position paid much less than the tree trimmer. They also tried to show that since most women were in secretarial positions, it was unfair that they got paid less than a man's dominated field of tree trimming. This is bogus due to many other aspects of each career, and I get very frustrated with this attitude. I want my daughters to know that if they think a man gets paid more in a certain field, go for a job in that field! Don't expect to sit behind a secretary's desk where 20 other women are waiting for your job to become open and expect the same salary as a man doing a job that must pay more to get decent workers.

    The most important thing women can do to help other women is to become trained, skilled, work their way into management positions, and then make changes to help others succeed behind you. If many positions in the financial industry require sacrifices women are not willing to make, then they have 3 choices--make the sacrifices that men do and then change what you can to help those behind you, don't make all the sacrifices and get paid less while having a more fulfilling personal life, or choose another career.

    Women have to get rid of the idea that they are victims in the working world and realize that they need to look outside of traditional women's jobs for their careers. I did and have profitted immensely, all the while doing work that kept me physically fit and healthier.

  • Report this Comment On September 16, 2013, at 11:36 AM, ETFsRule wrote:

    ""Not to be rude to gentlemen, but women's lack of testosterone is a feature, not a flaw". I don't think ones genital makeup or their particular hormone profile has a lot to do with how well they can find success, or failure."

    Yes, I think the author should leave horomones out of the discussion... there are certainly some counterpoints that the male side could use, if they wanted to go down that road.

  • Report this Comment On September 16, 2013, at 11:36 AM, ETFsRule wrote:

    .

  • Report this Comment On September 16, 2013, at 1:22 PM, TMFLomax wrote:

    jlclayton,

    Thanks for those great thoughts. I agree with you on many of them. I remember taking typing classes (actually the computer revolution meant they became VERY helpful in my jobs at varying levels throughout a career in online/financial news and analysis, typing speed actually DOES help), but also, my college studies had definite expectations of what I was going to "be when I grew up." Obviously I didn't really care or I wouldn't have gone on the path that I did. (And there was nothing wrong with the assumed professions, they just weren't my plans for my future.)

    I also remember the "boys take shop classes" and "girls take home economics" -- although I seem to recall the impression that the latter wasn't economics, it was frying eggs and sewing on buttons. (In retrospect I wish I was better at sewing on buttons actually, but at any rate. I believe I was able to opt out of that and therefore I just heard hearsay about it not being quite what one might think given the word "econ." Maybe I'm wrong.)

    I agree that victim mentality is a major negative and holds women back. Despite what anyone might think from articles like this one, I don't agree with quotas. However, I believe in open minds. I do think there are still existing stereotypes and many young women may not realize the options that are available to them -- and in the case of the Wall Street example, the options may not be very palatable at this time until more are able to go there in large numbers. And I think some industries possibly aren't particularly open to women's advantages and of course we do have some (not to mention, yes, regardless of gender many people do "bust gender" when it comes to professions and interests.)

    Gentlemen, sorry about the hormones but there are studies to support this and why it makes a different in investing and business leadership. We have very little balance between extreme risk taking and a little more "whoa, wait a minute." Obviously we can all go against biology but perhaps we should try a little harder to get the balance. Also, groups with cognitive diversity have also been shown to be more robust, even smarter, than groups who all perceive things in similar ways.

    Oh and talotu: point taken on Carol Bartz. Mea culpa. Certainly neither gender is necessarily the savior in any case, but being open and respectful of both is more to the point I'm making I suppose.

    Best,

    Alyce

  • Report this Comment On September 16, 2013, at 1:24 PM, TMFLomax wrote:

    Oops not "bust gender" but "bust stereotypes." Sorry about the long post.

    Best,

    Alyce

  • Report this Comment On September 17, 2013, at 1:43 AM, jlclayton wrote:

    I definitely agree that more women should be involved in financial careers and that it would be a benefit to everyone since we do invest differently. Several of my male coworkers invest as well, and they generally trade much more than I do and are always looking for the thrill they get from finding that next great stock that will skyrocket. I've learned that I'm more comfortable with the buy and hold method and don't worry about my next ten-bagger, just solid returns from good companies. Overall I've have larger gains every year, in large part from the teachings of MF. :)

  • Report this Comment On September 17, 2013, at 9:26 AM, sciencedave wrote:

    I have personally witnessed the male "ego-centric" behavior of my co-workers in buying stocks. It is more important for them to "make a killing" on a penny stock and be able to brag about it than have a more productive long-term investment strategy. I believe this behavior does has genetic as well as strong cultural roots. Unfortunately in most companies management still favors and promotes the arrogant and reactive approach to business which endorses this type of behavior.

  • Report this Comment On September 17, 2013, at 9:54 PM, BillFromNY wrote:

    At the beginning of your very fine column you seem to be saying that most of the women were forced out of the industry. Then, when you are discussing the Atlantic article, the focus is more on why women leave the industry.

    Perhaps women, possessing a finer set of values than men, just decide that they do not want to spend their working years in an industry with long hours devoted only to the selfish interest of making money even if they have to step over that gray line that defines what is ethical.

    Women are doing very well in the legal and medical professions.

  • Report this Comment On September 18, 2013, at 1:20 PM, verspachy wrote:

    Ah! Dissappointing? No. Racism? No! Different points of the mind? Yes! I did some searching arround and actually could find a reliable study saying that woman are more "calm" or have a different mindset than man. What I do know tough, most man when put together want to have an alpha male, aka loosing their mind. What I think the whole problem here is, why cant people control their toughts?

  • Report this Comment On September 18, 2013, at 1:28 PM, VitamanD wrote:

    Nice article!

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