Battle of the Sexes: Who Makes Worse Investment Decisions?
Tuesday, October 4th, 2016
When it comes to investing, men and women typically have different strategies. Men, on average, like to trade more.
It may be due to men's inherent nature of thinking they know everything. Women, on the contrary, want more information and want to know everything before they invest.
The truth of the matter is, it is impossible to know every detail before investing. Men also tend to panic more when the market drops. They lose patience and sell out at bad times, which leads to poor returns.
Women, on the other hand, are too risk adverse. This comes back to them wanting to know everything and they often just sit in cash.
Women tend to have longer time horizons than men, because on average they have longer life spans.
This means the importance of investing and generating returns is even more important. So the answer to the question is that they both make equally poor decisions.
This is why the average investor has made 2.5% per year over the last 20 years, compared to the S&P 500 average annual gain of 9.9%.
No matter if you are a man or a woman, it comes down to investing in good quality companies and making money over the long-term.
Today's company of the day is Dunkin' Brands Group (DNKN).
The current price is $50.68 and the 52-week range is $36.44-$50.91. Dunkin' Brands owns the companies Dunkin' Donuts and Baskin-Robbins.
Sales have increased 4.7% over the last 12 months and EPS has fallen 22.2% over the same timeframe.
It is interesting to see such a large fall in EPS accompanied by an increase in sales; this is something that must be understood if investing in the company.
Looking to the balance sheet, a current ratio of 1.4 looks good, but debt/equity is not material. The reason for this is the company has negative equity of $203.7 million.
It also has a large amount of debt at $2.4 billion. This was interesting to see, considering the company is asset light.
When the company franchises its brands it does not have to worry about buying the large asset of buildings, which should mean it shouldn't have a large amount of debt on the books.
If you own this company, it would be important to understand what that debt was used for. Looking forward to December 2017, estimated EPS of $2.33 gives us a target sell price of $38.45.
Just like we prefer other donut companies, we prefer other stocks besides Dunkin'.
Do you have a question or a company you'd like me to take a look at? Email us at Brent@WilseyAssetManagement.com or Chase@WilseyAssetManagement.com!