Retail investing is a tricky proposition. Individuals are competing with teams of industry experts, who are armed with billions of dollars, and trading software that execute thousands of trades per second. ‘Gurus’ on YouTube proclaim that they can teach you strategies to make millions each year through day trading. More power to you if you can pull it off, but I would take out a line of credit and wager it on the fact that the only thing you’ll make following these strategies is possibly a YouTube channel of your own chronically how much you lose and how quickly you lost it. Masterclasses… Am I right!? I digress.
One investment strategy that on average yields much better returns, is that of long-term investment. Investing always comes with risk, but any investor worth their salt will tell you that if you do your homework, look at the company that you’re investing in from a macro level down to a micro, and determine that it is a healthy, well-functioning business, then if held long-term, it will be a worthwhile investment. One of the most important components of a business is its leadership. After that lengthy, somewhat rambling introduction, and let’s sprinkle some more length here, we get to the meat of this article, Citibank has named Jane Fraser to be its next CEO, the first woman to hold the role at a major bank on Wall Street. This is huge news as a change CEO alone can lead to major changes in a company’s stock price.
At the of writing this article, investment in any US exchange is a risky proposition (US ELECTION! CORONA VIRUS-Cardi B voice), but here is a stock tip, buy CitiBank (Ticker Code: C) and hold it long term. Why? Well, the answer; Jane Fraser. Beyond the fact that she has led an immensely successful career in an extremely cutthroat industry, has degrees from Cambridge and Harvard, she is… a she.
A study conducted by the Warwick Business School tracked 2,800 individuals investing through Barclay’s Smart Investor platform. Females who were tracked over the three-year study period achieved better returns than their male counterparts. The men in Warwick’s study managed an average annual return 0.14 per cent over the FTSE 100, the women outperformed the benchmark by 1.94 per cent, a difference of 1.8 percent. A separate study conducted by Hargreaves Lansdown, found that women investors returning on average 0.81 per cent more than men over a three-year period. Extrapolated out, Hargreaves highlights that if this pattern were to continue for 30 years, woman included in the study would average a portfolio worth 25 percent more than the average man.
On a group level, diversity in the workplace brings a range of benefits. These benefits include a 60% improvement in decision-making abilities, more innovation, improved employee performance, and finally the holy grail of the finance industry: increased profit, studies have found that diversely staffed companies were 35% more likely to have financial returns above their industry mean, diverse executive boards have a 95% higher return on equity, and diverse leadership teams lead to improved financial performance.
So, I’m going to look into investing in CitiBank, and your organization should invest in Diversity, a decision that will compound returns for years to come.
DISCLAIMER! We are an executive search consultancy. The above is not financial advice. It is advice to increase diversity of your organization in the form of a mildly witty article. Please invest wisely.