Dear Investors,
In 2025, global stock prices rose. It felt great.
But what we witnessed in 2025 is the symptom of success, not the source of it. True success is found in the process—not the outcome—and the process is often arduous and unglamorous. In investing, winners learn to enjoy the process; failures fixate on outcomes.
The visible results we enjoyed in 2025 were shaped by decisions we made over the last few years—some planted even earlier.
A few examples of “process before outcome”
1) Chinese equities — planting seeds during the hard years
Chinese equities delivered a strong rebound in 2025. Yet the groundwork for that success was laid during the period when China was publicly deemed “uninvestable” by many prominent market participants—from mid-2021 to early-2024. The Hang Seng Index nearly
halved from its 2021 peak to its 2024 trough. After careful study, we concluded the drawdown was more likely a painful but temporary
phase—China was deleveraging and transitioning from a developing economy towards a more advanced one. We used the deep price correction to add Chinese equities into our portfolios.
For example, in November 2023, we decided to allocate an additional 15% of our Advised Funds Growth portfolio to Chinese equities. At the time, the news flow was negative and prices were depressed. It took fortitude to sow the seeds for a harvest that only became visible in 2025—and we did.
2) Gold — conviction that only becomes “obvious” later
We insisted on holding gold in our portfolios as early as November 2011, when Unicorn was founded, because we believe it is the ultimate safe-haven asset. Many of our investors entrust us with their core savings, so capital preservation and resilience have always been top priorities.
For most of our portfolios, gold forms around 10-20% of the allocation. Over the years, many friends in the asset management world criticize us saying that was “too much”—most conventional portfolios either hold no gold, or hold a token amount (often no more than 5%). In 2025, some of those same friends told us they would like to take back their words. That is how investing often works: the discipline looks unnecessary—until the day it is needed.
3) Copper and silver — risk management through margin of safety
Alongside gold, we have also studied copper miners and silver as potential opportunities, but have not implemented these ideas. Unlike gold (predominantly a monetary/precious metal), copper is largely tied to industrial production, and silver has significant industrial use as well—making both far more economically sensitive. Even in a normal slowdown, a 30–50% drawdown is not uncommon.
To preserve a margin of safety, we believe the best time to build exposure to these assets is typically after an economic slowdown, when prices already reflect stress. Until then, we are content to hold gold as our primary commodity proxy for hedging inflation shocks, geopolitical instability, and black-swan events.
We maintain a target allocation to precious metals. If we add silver or copper miners, it would likely be funded by reallocating from gold rather than increasing overall exposure. Given our early positioning in gold since 2016—the earliest point we could include gold in our managed portfolio (before that, we could only advise investors to buy gold themselves)—it has delivered a gain of more than 250%. This early strategic positioning allows us to stay prudent and patient, without needing to chase returns in silver or copper
miners.
The world today
We operate in a world shaped by powerful forces:
1. Heightened geopolitical tension
As global power dynamics shift, defence spending is rising, supply chains are being reconsidered, and uncertainty can surface abruptly. In such periods, safe-haven assets can provide a harbour when conditions turn ugly.
2. AI and robotics
Artificial Intelligence is still at an early stage. Together with robotics, it may reshape productivity, business models, and job markets. Many roles will be disrupted, many new ones will emerge—and over time, productivity gains can lift corporate profitability through higher efficiency and improved margins.
3. Global debt and the realities of fiat money
The world has become increasingly dependent on debt. In a fiat money system (money not backed by gold), policy choices matter immensely. As former Fed Chair Ben Bernanke once noted, governments ultimately have the ability to create currency. In practical terms, governments rarely tolerate deflation for long because deflation makes debt harder to service. This reality clarifies our long-term approach: we want exposure to assets that cannot be printed—and we want portfolios that can withstand multiple regimes (growth, recession, inflation, and shocks).
Our strategy for 2026
Macro backdrop: supportive, but returns may be more measured
2026 will likely be shaped by the policies of the world’s two largest economies: the US and China.
US: President Trump faces the mid-term election in November. With Republicans currently
controlling both the White House and Congress, he has strong incentive to keep the economy supported and voters confident. This points to a looser fiscal stance. He has also repeatedly called for lower interest rates. Rates have been trending down since end-2024, and we think this could accelerate after he potentially appoints a new Fed Chair in May.
China: China has already been running loose fiscal and monetary policies to stabilise growth, and this is likely to continue. Together, these policies should provide a tailwind to the global economy. However, the economy is only the environment where assets exist. What matters is asset value and pricing—and after several years of rising markets since late-2022, many assets are no longer cheap. Hence, we expect returns in 2026 to be more measured, with valuation discipline playing a bigger role.
AI: participate, but with risk controls
AI spending will likely continue in 2026 because companies can’t afford not to invest—they risk disruption and obsolescence. Over time, we believe this spending can translate into productivity gains and new revenue streams.
Many worry about an AI bubble. But bubbles are irrational, and timing the peak is futile. A bubble is usually clear only after it bursts—and the biggest gains often come near the end. That is why being early is often indistinguishable from being wrong. History is a good reminder. During the Dot-com boom, Alan Greenspan warned of “irrational exuberance” in December 1996. The market only crashed in March 2000—and the Nasdaq surged 300% in the years in between.
So we focus on what we can control:
1. Keep AI exposure within 15%.
2. Rebalance—harvest gains as prices rise and redirect into gold, bonds, and other quality companies.
This way, we participate if AI continues to run, while staying protected if the cycle reverses.
Key risk: inflation returning
The main risk to 2026 is the re-acceleration of inflation—driven by stimulative policies and large-scale investment cycles (including AI infrastructure). Inflation can be disruptive because it can pressure both equity and bond valuations simultaneously, as we witnessed in
2022.
Portfolio positioning
In summary, our approach in 2026 is:
1. Main asset allocation: stay the course, with comprehensive hedging
A conventional portfolio often hedges equities primarily with bonds (especially longer-dated bonds). We believe that is incomplete. Bonds hedge recession risk reasonably well, but in inflationary regimes, equities and bonds can fall together, like we witnessed in 2022-2023. We will continue to manage drawdown risk more comprehensively—using both precious metals and bonds alongside diversified
equity exposure.
2. Sub-asset allocation: quality at reasonable prices, with greater emphasis on valuation
We remain committed to buying quality assets at reasonable prices. That discipline is the best long-term insurance against permanent capital loss. What worked in 2025 can still work in 2026—but valuation matters more now because many assets are no longer cheap.
A personal note on your wealth plan
What I have shared above relates to portfolio strategy. At a personal wealth management
level, I encourage you to:
1. Meet your Family Wealth Consultant to revisit your profile and ensure your portfolios still fit your goals and life stage.
2. Revisit the strategies you put in place (such as the 3-Bags Strategy and any Regular Savings Plans) to confirm they remain suitable for you.
3. Keep learning consistently – A sound strategy alone is not enough for investment success. It must be matched with the emotional discipline to stay the course through inevitable market cycles. That discipline is not inborn—it is cultivated over time through continual learning and the steady growth of financial wisdom.
Success in investing does not belong to those who always forecast correctly or always pick the best stocks—because such people do not exist. It belongs to those with a sound intellectual framework and the emotional discipline to follow it.
At Unicorn, we will continue to earn your trust through rigorous research, disciplined risk management, and a commitment to keep learning and improving—together with you.
Wishing you a joyful and prosperous New Year.
Warm regards,
Seow Kek Wee
Chief Investment Officer
Unicorn Financial Solutions
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