Skip to content
Weekly Insights
Volume 12, Edition 18 | June 12 – June 16, 2023

Picking on Fathers

Doug Walters, CFA
On Father’s Day, we remind investing Dads that a little humility can lead to higher long-term returns.

Contributed by Doug Walters, Max Berkovich, David Lemire, Eh Ka Paw

Father’s Day is Sunday, and dads around the country are ready to be spoiled with homemade breakfasts, hugs, and gifts. Ties used to be the go-to gift for dads, but I suppose those days are gone. At Strategic, we have ditched the ties most days, which seemed unthinkable pre-pandemic. Times have certainly changed. But we are not going to coddle fathers in Insights today… quite the opposite.

We talk a lot about behavioral biases and for good reason. One of the primary values an advisor can bring is helping clients avoid common investing pitfalls. One of those is “overconfidence.” Avid readers will recall that we hit this topic a couple of years ago (Avoiding Investor Pitfalls – Overconfidence). But today, we zero in on fathers. As humans, we are inherently overconfident. That’s why, when asked, 93% of US drivers say their driving skills are above average1. 93% believe they are in the top 50%?!? Clearly, we have an overinflated view of our abilities! Unfortunately for us fathers out there, it gets worse.

It turns out many studies have shown that men tend to be more prone to overconfidence than women. In the world of investing, overconfidence leads to excessive trading… and excessive trading has been shown to reduce long-term returns. According to a study by Barber and Odean2, men traded 45% more than women and underperformed by nearly 1% annually. Over time, that is big money!

It is not all bad news for fathers. The data shows that the gender gap for over-trading and underperforming shrinks for married men versus single men. So is our message on this Father’s Day weekend to go and find a spouse so you do not damage your investment performance with excessive trading? No. Anyone can overcome this natural human bias of overconfidence. A good approach is to invest as if you cannot predict the future… because, guess what? You can’t. A long-term approach with a diversified portfolio and a disciplined process is a good start for avoiding biases and achieving long-term investing success.

1. Svenson (1981)
2. Barber and Odean (2001)

Excessive trading by men

The data shows that excessive trading leads directly to lower portfolio returns.

Headline of the Week

Higher for Longer Returns

The Fed followed through on its widely telegraphed plan to pause interest rate increases. However, the post-meeting messaging sowed confusion because it now appears the Fed is aiming for two more rate increases. Pre-meeting consensus was for a June pause followed by one more 0.25% increase in July.

Now the prospect of one extra 0.25% increase does not pack the same punch as earlier rate increases, and markets took the change in stride. In fact, stock and bond moves suggest a little doubt that the Fed will be able to follow through, which brings us back to this week’s headline. Markets can be forgiven for questioning how high rates will go, but they should be careful in assessing Fed resolve to keep rates there longer if inflation remains stubbornly high.

The Week Ahead

With the inflation report and Federal Reserve in the rearview mirror, the short week will be much less exciting than the previous one.

Playing it Safe

The Bank of England is the next major central bank to face a rate decision.

  • Despite some of the highest inflation numbers in the developed world, the United Kingdom is expected to report a Consumer Price Index (CPI) decline down to 8.5%, which would allow the Bank of England (BOE) to only nudge rates up by ¼ of a percent.
  • The CPI release on Wednesday, whatever it will be, will show progress from the 10.1% inflation in March.
  • Right now, the big inflation pressure in the U.K. is in food prices, running at 17% since April. Ouch!
  • There will not be a press conference after the BOE decision on Thursday, so no one expects much clarity on future rate moves.

Capital Bound

With rate meeting behind us, interest rate watchers will focus on Chairman Powell’s semiannual trip to Congress.

  • Wednesday, Chairman Powel is in front of the House Financial Services Committee, but the real reality television drama will be on Thursday in the Senate.
  • Chairman Powell’s archnemesis Senator Warren is expected to muscle the Chairman around. She once called him a “dangerous man.”
  • The focus of Senator Warren’s questioning will focus on unemployment.
  • The Chairman isn’t the only one on display this week. Several Fed officials have speaking engagements as well.

Day Off

  • Sunday is Father’s Day! We wish all of the dads out there an enjoyable weekend.
  • The U.S. Markets are closed on Monday for Juneteenth Holiday.

About Strategic

Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets of over $2 billion.



Strategic Financial Services, Inc. is registered with the Securities and Exchange Commission (SEC) as an Investment Advisor. The term “registered” signifies compliance with regulatory requirements and does not imply a certain level of skill or training.

The information provided on our website, including weekly market commentaries, financial planning articles, and other educational resources, is intended solely for educational purposes. It is designed to offer insights into financial planning and investment management, aiming to enhance understanding of financial concepts, strategies, and market trends. This content should not be interpreted as personalized investment advice or a recommendation for any specific strategy, financial planning approach, or investment product. Financial decisions are deeply personal and should be made considering the individual’s specific circumstances, goals, and risk tolerance. We recommend consulting with a professional financial advisor for personalized advice.

Please be aware that Strategic Financial Services, Inc. does not provide legal or tax advice. The content on this website is not intended to be used as such or as a substitute for legal or tax advice from a licensed professional. We advise seeking guidance from qualified legal and tax advisors regarding these matters.
Investment Risks and Portfolio Management.

The discussion of any investments on this website is for illustrative purposes only and provides no guarantee that the advisor will make any investments with the same or similar characteristics as those presented. The investments identified and described herein do not represent all the investments purchased or sold for client accounts. The selection of representative investments to discuss is based on various factors, including recent company news or earnings releases.

It should not be assumed that any investments discussed were or will be profitable. All investments involve risk, including the potential loss of principal. There is no assurance that investments mentioned will remain in client accounts at the time you view this information.

When index returns are mentioned on this site, they are provided as a general indicator of market conditions and are not representative of any client’s portfolio performance. Indices are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly. Therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.

While index returns are used as a framework to report on general market conditions, they should not be construed as an indicator of future performance of any specific investment or portfolio. Discussion of index returns is intended to provide context and insight, not to suggest that clients will achieve similar results. Each client’s portfolio is managed according to their specific investment goals and financial situation.

The opinions and any forward-looking statements expressed in the articles and videos featured in our resource center are as of the date of publication. These statements are based on current laws, regulations, market conditions, and other relevant factors, including third-party data. Given the dynamic nature of financial and regulatory environments, as well as potential changes in market conditions or economic circumstances, the information provided may become outdated or may no longer be accurate.
We rely on third-party data to form our opinions and projections, which means that these are subject to the same uncertainties that affect all data-dependent analyses. As such, we advise readers to exercise caution and not rely solely on the statements made herein for making financial decisions. It is recommended that investors consult with a professional advisor who can help assess the relevance and accuracy of the content in light of the current economic climate and personal financial situation.

Our website contains links to third-party websites as a convenience to our users. Strategic Financial Services, Inc. does not control, endorse, or guarantee the content found on such sites. We are not responsible for the accuracy, legality, or content of the external site or for that of subsequent links.
Contact the external site for answers to questions regarding its content.
The inclusion of any link does not imply our endorsement of the site, nor does it imply any association with its operators. Use of any such linked website is at the user’s own risk.

Related Resources