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Shop Stocks like a Woman:

[Disclaimer]: I need to start this post out by stating very clearly that I am not sexist, a bigot or have any hard feelings against women as a gender at all. In my profession I work closely with women and respect them immensely. The points I bring up in this post are simple observations I’ve made over a period of time that I feel can be applied to determining stock valuations and entry points into positions. In no way am I suggesting, insulting or insinuating anything negative towards the female gender.


To be blunt; for most of my life I’ve struggled to develop the patience needed to shop with a woman. It’s never mattered whether it was my mother, sisters, friends or girlfriends. I might never understand the slight obsession with shopping, spending hours trying on random clothes, browsing through aisles or walking great distances until my legs fall off in order to see “what’s new”.

When it comes to shopping, I’m a “Man’s Man”. When I need something I go and get it, then return to whatever else I was doing at that time. I usually complete my Christmas shopping in only a few hours because I’ve done the research online for my purchases and simply go to pick them up from locations with the best prices. I don’t waste time in areas I know hold no opportunities for a discount on any item of interest and I love staying on a budget. I’m also able to discriminate easily between what’s a want & a need in my life.

My two younger sisters on the other hand clearly missed their calling in life as “professional shoppers”. One is in teachers college, the other in nursing, and both could have made millions doing the shopping for those who either didn’t have the time or knowledge of style to accomplish this feat. They can easily spend 10 hours or more (yes…I said hours) at a mall and at times have kept stores open well past their posted hours of operation in order to continue shopping. My view is that they’ve never needed what they shop for since both have pretty much everything a young woman could want…but for some absurd reason they enjoy spending their free time roaming these expansive indoor environments in the hopes of finding what they call deals.

Through the endless battles, shoulder to shoulder congestion, waiting outside dressing rooms, carrying multiple bags of purchases to & from vehicles…during a trip with my girlfriend and sisters recently a light went off in the back of my mind. With the investing world (in general) still largely populated by men; was there a potential investing strategy or set of lessons sitting right in front of me all this time? Think about this for second – women really don’t ever shop that differently from one woman to another. Sure they enjoy individual preferences for which stores to shop in, but for the most part all women browse, compare, exhibit purchase anxiety (consumer dissonance) and then finalize their decision based on individual set criteria. While this infuriates most men (including myself) because of our lack of interest in the activity, for an investor…would the patterns and behaviours that women use when shopping benefit when investing in the stock market?

When this idea first popped into my head the thought that came to mind was a quote by Warren Buffett on purchase anxieties of stocks…

“The biggest mistake for any investor can be mistakes of omission; investments not made that could have performed spectacularly.”

Buffett was responding to questions of what mistakes he had made in his investing career that he could have corrected or learned from if he had known then what he knows today. The secret being that it’s not only what you pay for a stock specifically that matters most, but the fact that you did or didn’t buy it and what you missed based on those omissions in your analysis.

The question that arises when I shared this general idea with married friends was that don’t women overindulge on discretionary items? For the most part this falls under the needs vs. wants argument I’ve made before; but to a large degree if you ask a woman they disagree. Although an item could be a “want” purchase, it’s the strategic process that a woman goes through that helps them to eliminate emotion from the situation. A woman will either wait for a fair value price or simply bite the bullet and make a purchase at regular price in order to get what they want – they don’t concern themselves very much with the extra $X they spent in the grand scheme of things because of the benefits of having the purchase in contrast to never having it. An investor may watch a stock for a long period of time because of the benefits it offers their portfolio (diversification, income, etc) yet never make the purchase due to their perception of price. The stock may continue to appreciate over time when in the initial stages it would have been better to simply purchase it when you had the key opportunity. Remember, mistakes of omission…

Emotion:

The secret to how women shop is both simple and elegant. In investing we talk frequently about never allowing emotions to dictate our behaviours of buying, selling or holding securities. With women, in almost all situations of post-shopping activity, they are completely UNemotional. Sure they get excited and eager to show off what they’ve found, but it’s the simple fact that they suffer little emotional turmoil with a purchase that brought me this idea in the first place. After a purchase, women rarely suffer purchase anxiety – the emotional reaction of questioning whether the purchase was right or not. In contrast, many investors struggle on a continuous basis examining their stock purchases for validation that their actions were appropriate. “Did I buy at the right time” “Should I sell after a gain or loss?” “I just can’t seem to pull the trigger on a buy or sell of this company”.

If a woman buys a purse and next season is goes out of style, they hold little or no emotional distress over whether that purchase was a smart investment. They continue to wear the purse because of how its usefulness, how it makes them feel or they upgrade the purchase by looking for a newer one. To a woman that purse may have an alternative purpose in the future or even go back into style at some other point. Their friends may want to exchange it or they’ll simply donate the item to a charity or shelter. They simply don’t attribute the purchase to a bad investment because for a specific amount of time it served a purpose. The key here is that women are shoppers and not just buyers. They are extremely thorough in their shopping activities and the pursuit in finding their ideal purchase. They rarely accept anything less than their expectation of what they have in mind in contrast to a man’s view that “This will do”.

In the stock market, investors routinely hold onto a stock well beyond its useful life in the hopes of securing a larger gain or because “This will do.” Even if the stock is out of favour, out of fashion or beginning to show signs of wear (demise) an investor is unlikely in general to begin looking for a replacement because it’s good enough. Woman may look at the same situation with the view of something serving multiple purposes, where an investor won’t see the usefulness of a stock outside of very concrete barriers. Even though a single share of a stock may be the same price as a purse or other accessory the behaviour behind the buy/sell activities is widely different.

Improvement:

I now realise that women are constantly on the prowl for improvement when shopping. Frequently I’ve heard women in stores using the line “Hun, you can do better” in reference to something they’ve tried on. Women have the uncanny ability to focus on value in their purchases. They can at times weigh very accurately the price, quality, availability, opportunity and desire regarding a purchase in order to assess whether the purchase meets their needs or wants. If they miss out on an opportunity they move on and rarely experience conflict over what they could/should have done. They have confidence that they’ll find another deal sometime in the future; possibly even better deal than the one just lost. They’re willing to accept feedback from a close group of friends or family and have the ability to weight fundamental needs with contrasting qualitative factors.

Patience:

Women have an incredible willingness to wait for deals. I’ve often wondered how women can go shopping at the same mall three or more times each month while looking at the same items in the same stores. After watching and asking questions, I learned that frequently it’s not what might be new that they’re looking for, but the possible deals of discounts on items they’ve had their eye on for some time. For many investors, we glance at our watchlists of prospective investments in order to gauge the same information. Yet most women have a set price in their mind of what constitutes a fair value for a specific item. It’s not rocket science or an elaborate system of evaluation – they simply compare criteria and evaluate what they’re willing to pay. An investor in contrast may battle over a long period of time or never take the appropriate amount of time to research an investment before making a purchase. After the purchase an investor experiences anxiety over it and questions whether it was the right decision or not. Women don’t appear to because they’ve literally spent hours on the decision thinking it over and weighing the pros/cons of the decision. Women are the ultimate ability of multitasking – their brain is programmed for it. Many men can concentrate on one problem their entire lifetime without ever boring and we frequently have trouble reading the paper and paying attention to our significant others at the same time. A woman in contrast can be immersed in the middle of multiple conversations, yet still understand clearly what is being asked. It’s just how our brain works differently on an anatomical scale. Where we have a difficult time waiting for deals – women appear to have the patience of letting an item’s price come to them rather than impulsively buying at the first glance. The times I observe impulse is when in the midst of a moment a woman realizes that the cost of not getting what they need is greater the material purchase at the moment.

Discipline:

Although tallying the receipts at the end of a shopping spree may seem as though the spending was uncontrolled or rampant; if you ask any woman about their shopping habits the majority will confidently state that they were within their budget; it might not be your budget, but it certainly fell within theirs. Women are always aware of a budget and have the ability to budget effectively in an environment of discounted prices. Even if deals are on sale 50-60% off regular price, they still have an ability to assess a fair price they are willing to pay for that item and rarely will budge from that set point. Investors frequently can’t help themselves when a stock tumbles to the same degree and perceive a deep discount. The problem here is many investors have trouble distinguishing what a fair price for an asset might be vs. catching a falling knife. An investor is more likely to believe that a stock, having dropped 60%, is a sale vs. a woman in the environment of a sale. The important lesson here is assessing the material worth of something you buy. Even though something has dropped X%, the material worth of that item could still be much lower than what it is currently selling for.

My point:

The focal point of this entire segment is that women have a much better view of the big & small picture. It might be a hardwiring difference between the sexes or an evolutionary advantage, but women frequently seem to have the ability to always use the line “I told you so” more often then we’re able to use on them. In an environment of chaos (not unlike a market correction), women appear to be able to multitask, organize, prioritize and rationalize their decisions regardless of what’s happening around them. Through evolution they adopted a “nest” mentality and go to great lengths to protect their environment from additional risk. Women are cautious, scrutinize & dissect everything people say and do…just like an investor should. They are the masters of chaos management and able to navigate, organize and evaluate their surroundings without putting themselves at harm. They might rush here or there in apparent disarray, but they are able to execute with precision in a variety of environments.

After considering all of this, it’s no longer a mystery why Chuck claims that over 90% of all large purchase decisions are decided by women when I shared with him this idea. Whether you consider a car, appliances, a home or any other major purchase if a woman is involved, they strongly influence the final decision or you might end up single.

The purpose of all of this wasn’t to scrutinize the shopping habits of women and how some men hate being dragged to malls. Some men enjoy shopping just as much or more, but my purpose was to contrast a few ideas I felt offered sound investing discipline to readers in the hopes that one or two points might help. With the financial industry dominated by men, maybe we at times need to sit down, explain and seek advice from the masterful shoppers we know. The financial success of your future may not depend solely on that input, but it certainly can’t hurt if you feel that some of these points hold merit. After a second opinion, you never know, you might never look at a shopping trip quite the same ever again.

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