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Why women traders outperform men in the long run

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Proprietary Trader Kathy Donnelly joins Yahoo Finance's Jared Blikre to break down the latest market action in Bumble (BMBL), Airbnb (ABNB) and JOANN (JOAN). Donnelly also shares some studies that reveal gender effects on trading results.

Video Transcript

ZACK GUZMAN: Well, two different stories for two very different IPOs in Bumble and Airbnb, two recently newly traded publicly traded companies. And here to break down the technical indicators in both those names, with us is Yahoo Finance's chart master Jared Blikre, who has a special guest in tow for today. Jared.

JARED BLIKRE: That's right. Thank you, Zack. I want to bring in Kathy Donnelly, co-author of "The Lifecycle Trade." It's all about IPOs. And also, you're a proprietary trader. What a coincidence.

It's great to have you here. Let's just start off with Bumble. I have it up here on the Y Fi interactive. I'll get a chart up. Since inception of trading, what do you see in this chart here? What stands out to you?

KATHY DONNELLY: Well, what I like about it is that it's holding up well in this crazy market that we're having, this rotation out of tech and growth. It's got a nice IPO base. It's about 32, 30-ish percent deep, which isn't unusual.

And so if it stays in that range, we've got a buy point at the top of that range. So maybe this is one of the ones we're going to have a really strong IPO advance. It's-- in honor of Women's History Month, we have to note that the CEO is a woman and founder, and so that's pretty exciting. So I'm rooting for it.

JARED BLIKRE: That's great. Yeah, we're going to get to some studies that you found that have some interesting things to say about gender and trading in a minute. But first, I want to talk about Airbnb. You were talking about the base in Bumble. But looks to me like we have a base here, at least a trading range, in Airbnb, kind of had a fake out here, a false breakdown, but that can be a good sign. What do you see in this stock?

KATHY DONNELLY: Yeah, absolutely, Jared. Airbnb is holding up very well compared to a lot of the recent IPOs. A lot of the IPOs have undercut their day one low, which is normal for IPOs. 90% of them will do that. And Airbnb is holding tight right around that 50-day 10-week moving average. So I definitely see some strength here. The best-possible scenario is that it still continues to base nicely in this range breakout, and I'm hoping for a stair stepper or, even better, a rare jewel, which means it might potentially go up 100% in 90 days.

JARED BLIKRE: Wow. And you break down all this terminology in your book. I'll just promote that again. It's "The Lifecycle Trade." It's a must-read for anybody getting into IPOs.

And just a quick follow up question, because we've done two webinars, 45 minutes on this stuff, but I just want to emphasize, there's no real hurry to get into these trades. You did talk about 90% of these issues undercutting the first day low. So it does kind of pay to wait, right?

KATHY DONNELLY: Absolutely. And we're in a patience game as-- I feel like right now. A lot of the recent IPOs, they're undercutting, as I just said. And so we might have four to five to six months before these IPOs regain themselves. We have a few outliers, Bumble and Airbnb that we talked about, that could be strong here in the short term. But in the long term, hopefully midyear, some of these other ones will come out of their institutional due diligence phase, and we'll have some great super growth stocks for the end of this year.

JARED BLIKRE: All right, well, I just want to mention, too, I was just looking at Joann, which came to market today listing on the NASDAQ. It's up 2% now. And I just have a lot of memories of being dragged there when I was a kid and spending hours wandering that store. But I want to get your take on some of the homework that you did researching the effects of gender on trading. There are some differences in male and female behavior that can affect trading performance. What is it?

KATHY DONNELLY: Yeah, well, you know, they did some studies-- I mean, you know, men are different than women, right. Men are from Venus, women from Mars, or however the saying goes. I think I got that backwards.

JARED BLIKRE: That's [INAUDIBLE].

KATHY DONNELLY: But we're wired differently. And women have strong activity in planning and self-control, and so I think that lends themselves to be better traders. And a Fidelity study actually showed outperformance of about 0.4% to men on about over 800 million of their accounts back in 2017. And a Warwick Business School study also saw an even greater outperformance of 1.2. And they basically tied it to trading less, saving more, and willing to learn. So-- and I think that fits me to a T.

JARED BLIKRE: Yeah, I've had conversations, one in particular with the owner of a proprietary firm, and he said a very similar thing, that females just tend to have-- they tend to be more even keeled, whereas males tend to take more risks. So there's more upside, potentially, for men. But women over the long term, not going to suffer as many nasty drawdowns. All right, Kathy Donnelly, thank you so much for joining us. And I'm going to send it back to you, Zack.