The writer is a bond portfolio manager at Barksdale Investment Management and co-author of “Undiversified: The Big Gender Short in Investment Management.”
“What is a day trader?” Godson called me to ask this just after his eighteenth birthday, and he’d recently had a Schwab brokerage account full of high school graduation money.
When I define the term, he confesses to me that, yes, he became a day trader with a paper profit of $1000 in his first week as a legal adult. I say “confess” because he did what I recommended him not to do: peruse Reddit forums and gamble on dominate stocks like the retailer Jim Stop.
Godson would not go to the dorm if he bet wrong. I doubt most day traders are. I am sure he learns a lot from his experience.
But as someone who makes a living managing investments, I am concerned about the broader impact of the hype around day trading in so-called MIM stocks.
It perpetuates a number of myths about the very different “real job” of investment management which in turn perpetuates a lack of gender diversity in the industry. The scathing coverage of Mimi’s stock suggests that investing is the prerogative of the high-testosterone-wearing, risk-taking “brothers” who yell in online forums and go to war with Rich hedge fund managers. It is suggested that successful investors rely primarily on instinct rather than analysis.
The reality is of course very different. As a portfolio manager, I can personally attest to the fact that the majority of us, both male and female, are largely analytical, energetic, geeky people who wouldn’t consider buying stocks or bonds without doing a deep research on the company. Otherwise it would be reckless, not to mention a breach of fiduciary duty towards customers.
Focused bets on very few stocks by meme traders challenge the principle of diversification in Investing 101. The day trading approach requires tremendous risk appetite and acceptance of unexpected daily fluctuations in your life savings.
Research shows that women usually It has a different approach to risk who is that. This doesn’t mean they can’t take it – just that they tend to have a more balanced view of risk and reward.
I’m afraid a young woman reading the stock cover meme will conclude that she is either no match for obscure traders and/or she has no interest in working in an industry dominated by this personality type.
Women are already deterred from entering fund management in large numbers. The gender imbalance in the industry is severe.
For example, but not limited , Just 10 percent of US portfolio managers (the people who invest your money if you own a mutual fund or ETF) are women, according to a Morningstar Research Report. and only 16% of financial advisors (The people who recommend mutual funds and ETFs to you) are women.
Investment management interviews often enhance the actual investment experience, and are a troublesome way to screen candidates. In addition to a clear baseline of investable wealth required, which eliminates people who grew up in mediocre homes, how do you check this basic condition?
Let’s say a woman enrolls in an MBA program, the traditional pipeline in an investment manager’s career path. Her interest in an investment job may be affected. However, it may get derailed by the hiring process which almost always asks candidates about their investment experience. You could interview the serious young man who tells the story of “Ten Bigger” – an investment worth 10 times – on a stock that is beloved by meme audiences like the AMC Entertainment movie series.
Then the hype returns about what it takes to be a day trader. a favour Harvard Business Review Study She points out that women only apply for a job if they have 100 percent of the qualifications, versus 60 percent of men who apply. This may indicate that a job labeled “killer instinct” as a qualification will necessarily attract fewer women.
More attention should be paid to the massive gender and racial disparities in the ranks of portfolio managers and investment analysts rather than the 1,000th tier of M shares. Overall, this meme coverage likely contributes to this inequality by discouraging women and people of color from joining the investment industry.
My last call from Godson was another update on his paper earnings (up 45 percent or $4,500 now). He was with one of his classmates who is also a day trader. On a whim, I asked them if they knew any day trader. They said: I will not.
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