< Magazine Index > < Index For This Edition > < Subscribe >

We practice a division of labor in our household. I make the important decisions. Elizabeth concentrates her attentions on the management of the household. What triggered the argument, if that is not putting too harsh an interpretation on it, was that Elizabeth had overstepped her bounds. 

Elizabeth decides where we live, where we send the kids to school, how they are educated, what we wear and eat...how we spend our money and so forth.

I decide our position on the EMH. And the DHR. And the use of strategic air power. I am better equipped, frankly, by mother nature, to deal with these issues.

For the benefit of readers who are eager to return to better uses of their time, I will come to the point: men and women are different. I say that without prejudice or malice. It is simply a fact. Human nature provides for a certain division of labor...even at the most basic level. 

The line of demarcation runs right between the sexes, like the Maginot Line between France and Germany. You can breach the line -- but only at great cost...giving you the illusion of triumph and setting the stage for ultimate disaster.

Continuing this line of rumination...if men and women are as different as they appear, what is the consequence of the fact that many investors -- if not most -- are, for the first time in history, women?

Male society, for those unfamiliar with it, is hierarchical, simple and shallow. Testosterone, as mentioned above, is the key to it. The man with the most testosterone is usually the dominant male in any group. You can tell which one he is immediately. He is the most bombastic, the loudest, the most lunkheaded -- with a complete absence of circumspection and the subtlety of a train schedule.

His comments are predictably banal; his conversation is as dull and dreary as a pair of dirty blue jeans. 

God forbid that you would actually have to engage in small talk for any extended period of time with a group of men. They are incapable of any reflection that is not self- evident or self-serving. In short, they have nothing to say worth saying...and the best of them have the good sense to keep their mouths closed.

Women, by contrast, are superior in almost every way. While a man's conversation is blunt and imbecilic, a woman's is complex, devious, intriguing...and very manipulative. Women are wily. A man who engages in a discussion -- on any subject -- with a woman is immediately thrown into a battle of wits -- in which he is completely unarmed. He understands nothing of what is going on. 

The conversation of women is a pleasure. Especially French women. They seem to have been trained for small talk -- never at a loss for words. But maybe it is just the way their lips pout and purse as they talk. They seem to cut the French vowels so carefully, like a precision machine tool. The sounds emerge like diamonds, cut and polished on every side.

A woman's speech betrays only the slightest hint of what she really means. Her intentions might as well be stated in ancient Sumerian as in any extant language -- for they would be equally indecipherable to the average man. 

Men are well advised, in my opinion, to concede whatever issue is at hand and retire from the field while they still can. There is no winning an argument with a woman, the best you can do is withdraw with dignity.

But Elizabeth had crossed the line. She had invaded my turf -- the EMH issue. I had to give battle. 

In my most patronizing and condescending tone, I tried to explain that it was impossible to know which way the market would go. 

But unbeknownst to me, Elizabeth has become a trend follower.

"If it has gone up for 20 years," she challenged, "isn't it more likely than not to keep going up?"

The subject was not really even the stock market -- but the market for Paris apartments. Prices are rising. Elizabeth's intuition, as well as the amalgamated judgements of almost all the experts, say they are likely to continue to rise.

So the discussion centered on whether to buy or rent. Elizabeth believes we should buy. EMH, however, tells us that we really can't know in advance whether prices will rise or fall. And my contrarian instincts suggest that since everyone seems to believe that prices will rise -- it is at least as likely that they will fall. Anyone with any interest in buying may be doing so now, rather than later - - in order to benefit from the rising market.

I tried to explain this to Elizabeth. But contrarianism has not reached Venus, or wherever it is the women are said to originate. The concept did not appeal to her. Besides, she was too clever for me.

"If it is true that you can't predict the direction of prices," she said, "how could it be that contrarianism would allow you to make more money than a non-contrarian? Over time, won't you make exactly the same amount?"

"And if that is true, wouldn't it be just as wise, theoretically, to buy now as to wait?"

This was too much. She was not only arguing with me about EMH -- she was throwing it in my face.

"Look," I said, raising my voice, trying to make up for the weakness in my argument with the increase in decibels, "the average investor can't hope to outperform the market, but he can underperform it -- simply by being a mooch."

This made no sense in the context of the EMH, but I was not going to be stopped by logical inconsistency. I have been trying to figure this out and explain it for many years. How could I hope to explain all the nuances, paradoxes and complexity of the investment world in one single drive. Besides, I was driving at the same time, which drained my powers of concentration.

"Don't trouble your pretty little head about it," I wanted to say. But I thought better of it.

I explained that the Efficient Market Hypothesis only applies to big, fluid markets. At the edges -- say, the Vancouver junior mining stocks, unlisted securities and the micro-cap tech stocks -- it doesn't apply. These markets are hardly efficient. They are subject to all manner of persuasion. These are entertainment industries, not true investments. They provide the thrills and excitements of Las Vegas, along with the illusion of investing. Investors pay for this service, just as they would pay to get their cars waxed or their noses fixed. The insiders provide the market with stocks just as Ben and Jerry provide ice cream. They are consumable items. One is pumped up and then crashes. Then another is produced. An "investor" could practically guarantee that he would lose money by going into these markets without skilled advice -- EMH or no EMH.

Men have a certain observed and predictable pattern of behavior. Each one thinks he is smarter than his fellows. But few will make a move without the support of the group. Advancing over dangerous territory, a soldier (or an investor) needs his courage shored up, like bridge abutments, by a man on his left and one on his right. Coming under fire, if a single man turns tail and runs, the whole battalion is likely to do the same.

In the markets, the pattern has been repeated over and over again. But this market seems special. It has gone much higher than any other. And threatened with annihilation, investors did not turn and run last week.

Could it be that there is no New Man in the markets -- but a New Woman instead? 

Women have invaded and remade the major institutions of Western civilization. Governments are now run by women. (I exaggerate slightly to make my point.) Modern democracies are nothing like the ones of ancient Athens or early America. Women elect almost every officeholder. Since the days of JFK, presidents have tended to look better -- and now, to "feel our pain." Caring and sharing have replaced the pursuit of abstract principle. Tax rates of 50% have replaced those of 1%.

The universities have been taken over by women, too. Far more advanced degrees go to women than men. Women are filling the ranks of academia, from teaching assistants to deans. Are the universities different? I don't know. 

The churches, too. Most parishioners are women. And now, many of the clergy are women, too. Is it good? Is it bad? I don't know, but it's not the same.

And now the stock market. I don't have the figures, but a much greater percentage of investors are women than ever before. There are more single women, with more money to invest. Working women manage their own retirement portfolios. Many households give the job of investing to the distaff side of the marriage. 

The leading analyst in America is a woman -- Abby Cohen. Stock market commentators now tell listeners that they "feel" a company should reach a higher price. Or they have a good "feeling" about this or that stock. Intuition has replaced analysis -- at least to many of the folks watching CNBC's bubblevision. 

Never before have women had so much influence over stock prices. The stock market -- like the other great institutions -- has been feminized. But what will it mean?

Your correspondent,

Bill Bonner