If men are from Mars and women are from Venus, you would have made more money last year investing on the red planet.

Since early last year, our firm has been following the investing sentiment of affluent men and women though the Spectrem Affluent Investor Index and its subset, the Spectrem Millionaire Index. We created these monthly indices because previously there was no consistent way to track these two groups, which are important not only to the financial services industry but also to the financial markets as a whole. Those with investable assets of greater than $500,000 control 87 percent of all investable assets in the United States. Their collective sentiment clearly has the power to move markets.

While the monthly index results told us a great deal during the course of 2004, when we sat down to look at our first year’s results—we began the indices with data collected in February 2004—we unearthed a fascinating phenomenon: Affluent men were six times more bullish than their female counterparts last year.



Looking at the results of the Affluent Index, which tracks the sentiment of individuals with assets of $500,000 and above, averaged for the 11 months we tracked, men exhibited a level of 17 while women totaled 3. Index levels of 11 to 30 are mildly bullish, while those between -10 and 10 are neutral. Thus, men were comfortably in mildly bullish territory during 2004, while women were investment neutral. (Click image to enlarge)

This says a great deal about the investment approaches of men and women, as both sexes lived through the same events in 2004. The headlines last year were dominated by the Iraq war, terrorism and the presidential election, all of which affected investment sentiment at particular times. For a while, as gasoline prices rose substantially with heightened tensions in Iraq, inflation became a concern as well. Through it all, men remained more bullish.

So which gender was on the mark? On its face, it seems that the mildly bullish men had the better instincts. The Dow Jones Industrial Average ended 2004 up a bit more than 3 percent—hardly a stunning performance and not decisive for the men or women in our analysis. However, if we look at Nasdaq, which was up more than 8 percent, and the S&P 500, which gained nearly 9 percent, the year looks decidedly bullish. Add the Russell 2000, up 18 percent, and the men win.

Defining Events
Does this mean affluent women should simply sit back and let men do the investing? Hardly. First, while the men were right in 2004, we cannot extrapolate this performance to 2005 and beyond. Some one-time events last year drove sentiment. Also, men were significantly more bullish than the average in 2004—and this might have led to some overzealousness. If anything, the results may argue for joint decision making in affluent households.

The year-end index findings support the results of a report we released in March 2004 examining affluent women and financial decision making. In it, we found that 75 percent of affluent men were willing to take calculated risks while investing, but just 60 percent of affluent women would do so. In terms of investment advice, 70 percent of the affluent women said they use professional advisors as their primary financial advisors. Only 62 percent of men said the same thing. Overall, women were simply more cautious.

So men and women are different in their investment approaches. Is this meaningful? It may be. Remember, during 2004 we were in the midst of a somewhat uncertain market recovery. Our index findings suggest that women were not so ready to believe in the recovery. Men were. If we parse the market’s 2004 performance a bit, we see that the Dow average was actually down for the year until the presidential election. It blasted off after President Bush was reelected, and never looked back. One might say that absent this particular event, the women just may have been right in their neutral stance.

The difference between men and women in their level of bullishness is not so much what to invest in, but the timing of that investment.

The election quite clearly had an outsized impact on the perceptions of both genders. Based on open-ended questions asked as we compiled the indices, both men (20 percent) and women (27 percent) said the election had a greater impact on their economic outlook than any other factor.

Interestingly, the more bullish men were twice as concerned about inflation: 16 percent of men thought oil and gas prices had the greatest impact, compared with only 8 percent of women. Inflation fears waned in the final two months of 2004, coinciding with the market’s year-end run.

While affluent men were more bullish than women, both sexes, astonishingly, would invest their money in very much the same way.

The top holdings in the average affluent man’s portfolio, based on Spectrem’s index polling, are: stock mutual funds (25 percent); individual stocks (22 percent); real estate (16 percent); cash (13 percent); bond mutual funds (9 percent); and individual bonds (8 percent). Women had the same top holdings, in an order that varied just slightly: stock mutual funds (22 percent); real estate (19 percent); individual stocks (18 percent); cash (15 percent); bond mutual funds (9 percent); and individual bonds (7 percent).

So the difference between men and women in their level of bullishness is not so much what to invest in, but the timing of that investment. Affluent women would have structured their portfolios in an almost identical manner to men, but would have deferred making new investments longer.

Finally, when we look at the investment proclivities of men and women  based on the 2004 performance of the Spectrem Millionaire Index, a subset of the Affluent Index that begins at $1 million rather than $500,000, we can see the same overall trend—but to a lesser extent. Millionaire men were more bullish than millionaire women, but just twice as bullish (22 percent vs. 11 percent). Both sexes fell into the mildly bullish camp. Overall in 2004, millionaires tended to be more optimistic than the broader affluent population.

The lesson in this? Perhaps both affluent men and women could do with a little more optimism, bringing them closer in line with each other—and closer to the level of bullishness the millionaires exhibit. After all, the millionaires have amassed the most assets.