Traders are an interesting breed and as someone who runs a website about investing in China (https://chinafund.com), I’ve come across quite a few. On the one hand, they’re sometimes nothing short of brilliant but on the other hand, they (or, to be fair, at least the traders I know) frequently make ridiculously silly financial mistakes when managing the wealth they’ve generated via trading. To explain this phenomenon, I’ve put together something I like to call “The ABCDEFG” list.

So, without further ado, here’s why most of the traders I know (traders in general, not just people who invest in Chinese assets or otherwise conduct business related to China) are lousy at wealth management:

Adrenaline:

I’m not a short-term trader and can’t comment as to whether or not adrenaline is an advantage or a disadvantage in the trading world. I have no idea. What I can say however is that as far as my area of expertise (wealth management in general and gaining exposure to Chinese assets in particular) is concerned, an adrenaline-driven decision-making process is a no-go

Bad spending habits:

Doing well financially doesn’t mean you can now live the life of a rockstar, especially if you’re in the “new money” category and find yourself in such a situation for the very first time (something I’ve come across in China rather frequently)

Compulsions:

Obsessively monitoring your portfolio. Wealth management isn’t trading, you don’t have to check how each of the assets you have exposure to is doing seven times per day. Seriously, it’s ok, you don’t have to. Sure, there’s nothing wrong with doing it every now and then, catching up on news that is of interest (news about China for those who have exposure to Chinese assets, for example)

Delusions of grandeur:

thinking that just because you’re doing ok as a trader, you’ll be good at everything. Some people consider wealth management and trading kind-of-sort-of the same thing. They’re not

Emotions:

While emotional thinking can help you as a trader to a certain degree because you “tune in” and understand/relate to what the market is thinking at a certain point in time, they’re not as important in the world of wealth management. In fact, more often than not, they do more harm than good, whether you have your eyes on China or any other jurisdiction/asset class

Fatigue:

Maybe because they feel obligated to have a “Wolf of Wall Street”-ish lifestyle, perhaps because they deem five cups of coffee per day obligatory, I don’t know why but most of the traders I know suffer from lifestyle-induced fatigue. Don’t be one of them

Greed:

Your returns don’t *have* to be as spectacular as those you come across in let’s say the cryptocurrency world (to give an example of a highly volatile asset class with which China has a love-hate relationship, love from the average Chinese investor and hate from the authorities over in China). Again, wealth management and trading are not the same thing, they’re remarkably different in a lot of respects