Why Some Men Are Big Losers

A hedge-fund billionaire thinks moms can't compete on Wall Street. Science says he's wrong

By Rana Foroohar Monday, June 10, 2013

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    All this helps shed light on some observations about gender and finance. The biggest winners and losers, like JPMorgan's London Whale, tend to be male. Female traders, meanwhile, often do better in the long term by avoiding the highs and lows. In a study of more than 35,000 traders by Brad Barber and Terrance Odean of the University of California, Berkeley, from 1991 to 1997, women outperformed men in large part because they didn't trade as frequently. A 2009 study by Chicago-based Hedge Fund Research, in which female traders trumped men over a nine-year period, had similar findings.

    The research has fascinating policy implications for firms and even governments. Certain hedge funds have begun automatically pulling traders off their desks when their losses go beyond 3% of capital, which makes them vulnerable to enhanced risk taking in an effort to make up their losses. (Coates would like to see pre-emptive breaks for top traders on winning streaks to give them time to decompress from the snowballing T-level effect before they start losing money.) Deutsche Bank has announced that bonuses for top managers will be deferred for five years to incentivize long-term thinking. Some politicians and investors (including Warren Buffett) are pushing tax policies that would penalize short-term trading. As markets begin to think longer term, I hope we see a kind of natural affirmative-action effect: women and older workers (who are also less likely to go on testosterone-fueled trading binges) will start to look better and better. And if Paul Tudor Jones is lucky, a few of them may still be willing to work for him.

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