This Week In Your Wallet: Invest Like a Pro

Q: Since the pandemic began, have you been investing more, particularly outside your retirement accounts?

A: Good news! Many people, including over half of women, are indeed investing more as per Fidelity’s 2021 Women and Investing Study. About 50% of women reported increased interest in investing since the pandemic, and 42% indicated they have more funds to invest.

So, what’s driving this shift? Researchers often struggle to explain why such changes occur. In this case, the increased funds come from reduced spending on dining, commuting, and travel. Additionally, the bull market has attracted more investors, while low savings returns have led to what’s termed the TINA trade—“There Is No Alternative.” Furthermore, trending topics like meme stocks have sparked interest.

However, one area that hasn't improved as much is the confidence women feel in investing. Despite rising interest, confidence remains a challenge. Fidelity’s analysis of over 5 million accounts over a decade revealed that women outperformed men by an average of 40 basis points.

This finding took me back to research by UC Davis professors Terrance Odean and Brad Barber. Their study from 1991 to 1997, analyzing thousands of accounts from a major discount brokerage, found that men traded 45% more than women but earned about 1.4% less on average. They attributed this disparity to higher trading costs and overconfidence, titling their paper: Boys Will Be Boys: Gender, Overconfidence and Common Stock Investment.

Supply Chain Challenges

One of my all-time favorite shows is “CBS Sunday Morning,” hosted by the charming Jane Pauley. My husband and I look forward to its unique blend of stories tailored for our audience (and even my daughter's 24-year-old boyfriend tunes in).

This past weekend didn’t disappoint. If you’ve noticed delays in your orders or empty store shelves, reporter David Pogue broke down the supply chain issues. Interestingly, the U.S. isn't short on goods; there's an abundance, but a lack of trucks and workers to transport them.

The silver lining? Pogue’s source, MIT's Yossi Sheffi, predicts a return to normal by the second quarter of next year without government intervention. Meanwhile, JPMorgan Chase CEO Jamie Dimon believes we could see improvements even sooner, stating, “This will not be an issue next year at all.”

Addressing Workforce Challenges

You’ve probably heard that the September jobs report showed only 194,000 new jobs added, falling short of expectations. Economists anticipated this would be the month workers would return without unemployment supplements. While some, like teachers, returned earlier as schools reopened, the message remains clear: America’s unemployed continue to face childcare and health issues, making them hesitant to return to jobs perceived as unsafe or underpaid. Even incentives like bonuses and free college tuition aren’t enough to draw workers back into warehouses for a smooth holiday season.

As we've seen throughout the pandemic, caregiving challenges disproportionately affect women. Notably, 309,000 women over 20 left the labor force in September, while 182,000 men entered. For a deeper look into childcare issues and parental responses, check this out.

Where Did My Money Go?

Most mornings, I wake up to at least one email from my husband, who’s a night owl. These aren’t love notes; he shares articles he finds late at night. This week, I received some intriguing pieces, including a recap of the Ted Lasso season finale (spoilers included) and a piece discussing how payment apps, while convenient, are leading to “cash leakage,” causing people to spend more than they realize.