A Conversation With… Nancy Tengler
Providing proven wealth accumulation strategies, tailored advice and a comprehensive market analysis, The Women’s Guide to Successful Investing is a must-read for female investors who want to master volatile markets with long-term success.
In The Women’s Guide to Successful Investing, you share the astounding facts that women control over half of the nation’s personal wealth; own businesses that grow at one and a half times the national average; and—when they don’t excuse themselves from participating—outperform men in the realm of investing. What are they doing with their money if not investing and why do you think they have a tendency to shy away from it?
Women tend to be savers rather than investors. They are more risk-averse than men which is one of the reasons they make better investors and consistently generate better returns. I think women shy away from investing because they have not been encouraged to participate in finance. A recent article on The Wall Street Journal’s MarketWatch website cites a recent T. Rowe Price study entitled the 2014 Parents, Kids & Money Survey which cites the surprising statistic that among children eight to fourteen, 58% of the boys say their parents talk to them about setting financial goals while only 50% of girls report the same. Clearly, one of the problems is that (young) women are still not encouraged as much as (young) men to focus on financial matters. In addition, they seem to self-select out of finance as well. ASU reports that the number of women enrolled in finance has declined over the last ten years. The irony? Women–empirically and anecdotally–make excellent investors.
Can you give us a sneak peek into the case studies and personal stories of financial management that you feature in your book?
I spend some time talking about stocks that have fallen from grace. We call these Fallen-Angel Growth stocks. These are great companies that have had a marketing misstep or a product problem and the stock price has fallen to reflect the problems. I compare three stocks using the techniques outlined in the book: Apple, Coach and Nordstrom. Together we explore the variables and reach a conclusion about which Fallen-Angel might be a stock to own for a lifetime and which may not. You’ll have to buy the book to find out which is which.
If you can narrow your eleven “intelligent investing rules,” what would you say are the top three steps a woman can take to improve their approach to investing?
First, women must identify an investing style that suits their risk parameters and their schedule. Once they establish a investing discipline they must stick to it. Like an exercise program or diet the point is to follow the plan, even on days when things don’t go exactly as planned. Second: don’t run with the fast crowd. Women should never buy a company they don’t know or understand. My biggest investing mistakes were “stock tips” from a friend who claimed to have made a great deal of money or provided assurance of a home run. Never, never, never follow that kind of advice. And finally, identify stocks to own for a lifetime. The kinds of companies that are industry and brand leaders–survivor companies–that you will feel confident owning for a lifetime.
Are there particular companies and/or stocks that women are more likely to invest in than men? What qualities do women look for in a company when investing?
Not really. Since women are more likely to be the purchasers in their families they are much more aware of product trends and quality; of client service oriented companies and the best discounters. Because they apply those critical skills to acquiring food and clothing and health care and just about everything else for their families they are well-positioned to identify stocks to own for a lifetime. What I can tell you about women is that the research shows they perform more detailed research than men and they tend to trade less often which enhances their total return.
When should women start investing and does age affect how they do so? Are millennial women who are relatively new to the workforce just as able as those who have worked their way up to management and c-suite positions?
Women of all ages should invest. I spend a great deal of time in the book explaining the long-term and medium term returns for stocks, the importance of the compounding of dividend payments and the passage of time. I share an anecdote of two transactions I engaged in the week my son was born in 1988. One was a share of IBM stock for him the second was a Donna Karan sweater that covered my post-baby body elegantly. That it was cashmere was lost on me and when I got the bill I choked. $1099. Plus tax. I still have the sweater. It is bally and misshapen. That share of IBM stock? Well it has increased 14 fold through the compounding of the dividend and growth in the stock price. Imagine if I had invested the $1099 in IBM stock! Conversely, as a professional money manager met an 80-year old man of considerable wealth whose entire portfolio was invested in stocks. He believed his time horizon was not his life but the lives of his heirs. All of us should invest that way with a small portion (whatever we don’t need to live) of our portfolio. It takes time–but well worth the effort.
What are the aspects of your professional career and personal life that drove you to write an investing roadmap for women?
When I retired from the investment business my kids were entering high school. I was busy with the daily living of carpools, and laundry and grocery runs and I no longer wanted to shoulder the responsibility of managing our assets. My husband and I interviewed investment managers and I was shocked by two things: the first was that though many of these firms knew me professionally, in each meeting the presenters spoke directly to my husband, ignoring me! And I had been a chief investment officer and portfolio manager in the same town for over twenty years as well as a financial news commentator. For the first time I understood why women check out of the conversation. The second problem I had was the fees being charged by the investment managers we interviewed. By the time we would pay their fees these money managers would be unable to generate performance in excess of the market. What was the point? That is when I began devising the intelligent investing rules I reveal in The Women’s Guide To Successful Investing.
How did you become such a knowledgable and capable financial manager? Is there any other book like The Women’s Guide to Successful Investing out there from which you were able to draw advice?
I have been investing other people’s money since the mid 1980’s. There have been some pretty exciting and devastating market periods over that thirty-year period. But overall, stocks have still managed to return between 9-10% per year on average. I’ve watched and learned. I’ve heard the panic on the financial news networks (on which I used to appear regularly) and I’ve learned that those times — the ones when everyone is scared — are often the best time to to identify great companies at fire sale prices. A stock like, Starbucks, for example, that traded below $9 per share in 2009 and is now trading in the mid $70’s. If you have been watching the company, know the product and have confidence in the management you can make a great deal of money over time. That is the purpose of the book: to share with smart, busy women a variety of strategies they can employ to meet their financial objectives.