As JPMorgan Chase’ CEO Ina Drew resigns from her position, Time observes that her descent from power points out a glaring problem: a lack of women on Wall Street. Drew resigned in the midst of a $2 billion trading loss and a perceived failure of her job as a manager. But back in the day, Drew was known as one of the most successful and talented women traders on Wall Street. Of course, with few women to compete against, that doesn’t really mean much.
Wall Street trading is a heavily male-dominated industry that is often a difficult world for women to break through. But a 2001 study shows that men trade more frequently than women (approximately 45 percent) and that this overactive trading generally decreases net returns by 2.65 percentage points a year. Women on the other hand, see a loss of only 1.72 percentage points.
Authors of the study Terrence Odean and Brad Barber offer their explanation: “We believe there is a simple and powerful explanation for high levels of trading on financial markets: overconfidence.”
Men, who in several other separate studies, have shown to exhibit overconfident behavior in financial matters are in fact hurting their profits, making women the best traders. Too bad for Wall Street, there aren’t more of them. Looks like it’s time for women to break through the gender barriers on Wall Street and start bringing home the money.
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