Why women may be the winners in today's market

Bleary-eyed from watching CNBC's endless chatter about falling equity values, melting credit markets, pending bailouts by the Fed of corporate titans, and continuing negative news on housing values, American households have endured yet another week of plummeting personal net worth.

But women appear to be reacting quite differently to the latest market tumult than men, according to financial planners and investment managers. Rather than attempting to make a quick profit by arbitraging interest rates or targeting a lower valued blue-chip stock, most women are comfortable to sit on the sidelines monitoring their investments.

"Women investors are more conservative, choosing fixed-income and money-market funds, which will fare better in today's markets," says Lauren Coulston, assistant vice president and program director at Oppenheimer Funds in Denver. "They are longer-term, buy-and-hold investors, which should work in their favor given today's realities."

Numerous studies confirm gender differences with women finding investing more stressful and less exciting than men. Women also have different motivations for investing. For them, the return of an asset is more important than the return on an asset. Financial security is the primary investment goal.

Women focus on achieving family goals – investing for retirement, children's college education, a larger home, and better healthcare.

Despite the fact that more women than ever before are directly handling their investments, nine out of 10 women reported feeling financially insecure, according to a 2006 survey by the Allianz, a Minneapolis-based life insurance company. It found that more than half of women still acknowledge a "bag lady" phobia – an illogical fear of losing all their money. That insecurity existed as frequently for women earning over $100,000 annually as those who have limited incomes. Financial security and financial independence are 15 to 20 times more important to women than men, the survey said.

Almost half of women acknowledged they are not knowledgeable about investing compared with a third of men. While women may lack confidence in their investing knowledge and skills, they are more likely to retain financial advisers: 70 percent of women use a financial adviser versus 50 percent of men.

In addition, almost 80 percent of women have a formal financial plan versus 60 percent of men, a 2005 Merrill Lynch survey found.

While both men and women consider risk before making an investment, men are far more willing to take on substantial market risk. According to a 2006 Iowa State University study, 45 percent of men were significantly more willing to take "above average risks" compared with 28 percent of women.

The Merrill survey confirmed that women are less likely to err in making investments than men. The survey found that 47 percent of men had held a "losing investment too long" compared with only a third of women. A third of men are also more likely to be dangerously over-leveraged in a single investment as opposed to a fourth of women. Compounding their higher risk taking, 25 percent of men confirm they invest without performing any research compared with 13 percent of women, and men are much more active in churning their accounts (12 percent) than women (5 percent).

The Merrill survey also found that men are also more likely to double-down on their investment mistakes, with 63 percent of men buying stock again without research despite earlier losses. Only 48 percent of women reported that judgment lapse. Men also continue to misread the market, with 6 out of 10 mistiming market trades compared with less than half of women.

Women also appear to be better able to learn from their mistakes and express greater interest in improving their financial education than men.

"With a plethora of news stories on the market, women who value financial information and education should be well satisfied," Ms. Coulston says.

With no assurance of better economic news in the immediate future, all investors should take measure of any losses and review portfolio strategies. Women who take a measured approach toward investing should continue on that path.

Some other points to consider:

•Given the market upheaval, revalue your net worth at americancentury.com/calculator/net_worth_calculator.jsp.

•Reconsider your asset allocation and put new money into secure investments.

•Continue 401(k) savings to get an employer match. Place new contributions in shorter intermediate term CD accounts until the market settles.

•Watch small community banks. Many are likely to have problems. Spread your deposits among several banks if they are over $100,000. See if your money is protected at myfdicinsurance.gov.

• Dr. Kathleen Connell is a professor at Haas Graduate Business School, University of California, Berkeley.