If you want to make money on the stock market, deal with a woman

With the markets plunging and the City in crisis, what your share portfolio needs most, says a new report, is the love of a good woman.

The new study will turn the macho world of the dealing rooms upside-down – because when it comes to a "bear" market, women traders are a much safer bet than their male counterparts.

While male traders are natural risk-takers, women are more risk-averse, says the study. That's fine in a "bull" market – when shares are going up – because men are more likely to make huge sums for their clients. But when the stock market is in decline, women sell shares earlier and losses are much smaller. In fact, according to the report by investment bank Dresdner Kleinwort Wasserstein (DKW), on average they lose half as much as the men.

On the other hand, women quietly and cautiously get on with tending their portfolios in the bull market, making smaller gains. The conclusions were drawn from a behavioural analysis of City traders and how they managed their portfolios. DKW analyst James Montier said: "Much of the psychology behind markets has to do with the over-confidence of traders and the tendency to exaggerate their own abilities.

"It was a psychology that was hugely enhanced by the bull market, where rising stocks gave people a false impression of their own stock-picking ability. These are traits that men tend to demonstrate particularly strongly."

In the bear-pit atmosphere of the dealing room, he said, there is a strong casino atmosphere and a strong feeling of shame for any losers.

According to DKW, within the gender split there are further refinements. Single men are by far the biggest risk-takers and pay for that by suffering the biggest losses. Single women, though, represent the safest hands for your money.

These are difficult times for the City, and the DKW research will at least give investors some idea of where to put their money: in the hands of women. However, women are hard to find on the dealing-room floors. One male trader told The Independent on Sunday: "All that analysis is fine, but as I look around this floor, the only woman I can see is making my tea."

The DKW analysis was based specifically on the behaviour of traders, but fund management companies have long recognised the superior psychology of female asset managers. Carol Galley and Nicola Horlick are among the most famous women to have triumphed in the male-dominated City environment

Stocks may have enjoyed the occasional brief rally, but the main direction just now is down. According to City analysts, the market is behaving as irrationally now as it was during the peak of the dot-com bubble that saw shares lifted well beyond realistic values. The only rational move now is to employ a female trader – if you can find one.

Male traders tend to 'fall in love with their investments'

Theodora Zenek is a bond fund manager with New Star, an asset management company in the City. She has been a professional investor all her working life and makes decisions affecting millions of pounds of other people's savings every day.

Her experiences bear out the DKW study. "When it comes to a stock portfolio, women tend to look at the whole thing, while the men prefer to select particular investments," said Ms Zenek. "Men are aggressive buyers, but that either gives you staggering out-performance or staggering under-performance." Men, she said, have more confidence but they also demonstrate "a tendency to fall in love with their investments".

"They are confident when they are stock-picking. But loss of face is everything, especially among their colleagues."