The financial market has historically been a male-dominated space. And though women are gaining more respect and attention in financial services, their place in the world of investments remains vague. Moreover, the role of women is often underestimated, if not downright ignored — just like it was with Marie Curie and Sophya Kovalevskaya, two genius scientists of the 19th century who were struggling to be recognized by a scientific society their entire lives.
Let's look closely at the evolving role of women in finance. In this blog post, we'll tell more about six extraordinary females that have already earned their stripes in the business.
One can claim that a new era began in 1967 when Muriel Siebert broke the 175-year hegemony of male trading on the New York Stock Exchange (NYSE) and became the first licensed female broker. Sibert has not only reached great heights in this field but has also managed to debunk certain 'discriminatory' myths. However, it was not until half a century later that Muriel Siebert's grand success was replicated by Stacey Cunningham, who in 2018 became the NYSE's first female president ever to be appointed.
Still, men are more visible when it comes to Wall Street jobs. How come? Are there any specific reasons that prevent women from choosing a career in finance and ascending to top positions? Two specific myths stand out.
1. Most women are not good at numbers.
Definitely, that is not the case. A recent study published in the Journal of Statistics and Data Science Education found that women in statistics classes do better academically than men over a semester, despite having more negative preconceptions when it comes to their abilities. Indeed, women often lack self-confidence precisely because of these kinds of stereotypes and thus feel reluctant to compete in male-dominated professions like finance.
2. Women are more emotional, overly cautious, 'risk-averse,' and therefore ill-equipped to make important investment decisions.
Firstly, this is a major generalization. Secondly, it is incorrect. Furthermore, extra prudence is not necessarily a bad trait, especially in a business where your hard-earned money is constantly on the line.
The study by German Comdirect Bank showed that women outperform men in investment portfolio management. A large sample of almost half a million private portfolios demonstrates that in 2007 and the crisis year of 2008, women did 4 to 6% better than men. In 2016, Fidelity, a multinational financial services corporation, looked through eight million investment accounts and concluded that women outperform men in investing by 40 basis points. Yet another study of 2,800 investors by Warwick Business School in the UK showed: 'While annual returns on investments for men were on average a marginal 0.14 per cent above the performance of the Financial Times Stock Exchange 100 Index (FTSE 100), annual returns on the investment portfolios held by women were 1.94 per cent above it. This means returns for women investing outperformed men by 1.8 percentage points.'
These findings raise an important question—do women possess a 'winning mindset,' allowing them to beat men in trading? Both yes and no.
Trading is almost like a technical science, where you need to study quantitatively accurate patterns and use rigorous hypothesis testing methods based on reproducible experiments and strict logical reasoning. Therefore, very little depends on the gender here. What matters more are the applied abilities and discipline. However, the problem of self-discipline is not unique to anyone. On the contrary, it is quite common for both genders.
What separates women from men is that they tend to have smaller egos, and, as a result, they are more willing to recognize their weaknesses and accept their mistakes. A more balanced and cautious approach to trading allows women to avoid overtrading and falling into a tilt until a margin call blows their accounts.
Another critical characteristic of women is patience. The ability to wait patiently for the best entry and exit points does pay off greatly.
In any case, the times when women were out of the financial and investment field are long gone. Wall Street is not as brutal as it used to be. Moreover, women are not only pursuing professional careers in finance on an institutional level but are also actively engaging in retail trading around the world, including Forex. For example, recent research of Mexican traders conducted by OctaFX found that 1 out of 4 women in Mexico started investing three years ago. The same study also found that Mexican women are considered well-informed and rational investors. They are familiar with at least five investment platforms.
To finish this article on a bright note, we'd like to mention a few great women that made a difference in the industry. Apart from Muriel Siebert and Stacey Cunningham, many other women have achieved tremendous success in investment and trading. Taking this opportunity, we would like to highlight more personalities who, in our opinion, have gained the biggest recognition among retail traders.
Kathy joined JP Morgan Chase on Wall Street at 18, covering the currency markets. Currently, she works as MD of FX strategy at BK Asset Management in NYC. With her 20+ years of experience in financial markets, Kathy often appears in The Wall Street Journal, Reuters, Bloomberg, Marketwatch, Associated Press, and other top world resources. She is regularly on air at CNBC and Sky Business. Kathy is an internationally distinguished author of 'Day Trading and Swing Trading the Currency Market.', a well-known bestseller.
Linda Bradford Raschke
Although Linda has already retired from a professional trading career, she continues to maintain her private trading operations. Raschke has been a full-time professional trader for over 40 years and was featured in several books, including The New Market Wizards (by Jack Schwager) and Women of the Street: Making It On Wall Street—The World's Toughest Business (by Sue Herera). Linda has served on the board of directors for the Market Technicians Association and was the American Association of Professional Technical Analysts' president.
In 2014, Cathie Wood founded ARK Invest, an investment management firm that manages several actively managed exchange-traded funds (ETFs). Since then, ARK Invest has become a closely-watched investment fund known for its high risk, high reward strategy, and radical transparency. Its flagship innovation ETF soared by 150% in 2020, gaining Wood celebrity status. As of March 2021, two funds run by Wood were the largest on the list of the ten female-run funds by total net assets. Catherine was named the best stock picker of 2020 by Bloomberg News.
She was the youngest female full-time floor trader in her early 20s to enter the NYSE trading floor. Lauren also became the second African American woman to have such a position.
The world of finance embraces only the most persistent ones—perseverance and courage, endurance and intuition matter the most here. Traders are often compared to salmon during spawning, striving to go against the flow. At the same time, investment trading is no longer an exclusively male privilege. The most successful female traders are highly disciplined, which is a helpful trait in recovering from losses. Risk awareness, planning, and continuous training allow them to achieve high results and outperform their male peers.