Despite the Federal Reserve’s half point interest rate cuts yesterday, when the stock market will correct itself and when a healthy economy will return is not clear, but the behavior of women investors is a good model for how personal investors should handle the ups and downs of the stock market. After Tuesday’s rate cut was announced, disappointed investors who were expecting a more dramatic three-quarter point cut continued to sell, driving the markets down. According to the National Association of Investors Corporation (NAIC) women, who now make up 47 percent of all investors, usually demonstrate patience with the stock market, practicing a buy-and-hold strategy, which allows them to ride out otherwise painful lows and reap the benefits when the market goes up again. When choosing investments, women usually spend more time researching potential stocks, look at the broad picture and general trends and are not tempted by stock tips that can result in major losses.
Women’s willingness to tolerate the market’s lows has resulted in great success. According to NAIC, which represents more than 37,000 investment clubs nation wide, women’s investment clubs, which make up 54 percent of all NAIC investment groups, consistently outperform men’s investment clubs, which account for 8 percent of all NAIC investment groups, by an average of 1.4 percent annually. The market’s recent downward trend has many investors shedding stocks for fear of a weakening economy, but patience and tolerance may prove to be the best way to survive current and future stock market roller coaster rides.