Artificial Intelligence has become the talk of the town. From boardrooms to coffee shops, dinner tables to trading floors, AI dominates conversations and captures imaginations. And rightly so: we are living through what many call the Fourth Industrial Revolution.

The first three revolutions fundamentally reshaped human progress:

• Mechanisation powered by steam (~1800)

• Mass production enabled by electricity (~1900)

• Digitalisation culminating in the internet (~2000)

Today’s AI revolution stands firmly as the next seismic shift. Unsurprisingly, it is driving enormous excitement, and enormous investment. Companies that fail to ride this wave fear being swept aside by it.

It has now been three years since the “ChatGPT moment” of November 2022, widely viewed as the spark that ignited the current AI boom. And as with every major technological transformation, an inevitable question hangs in the air: Are we in a bubble?

The Nature of Bubbles, and Why Investors Secretly Like Them

Capitalism naturally drives capital toward significant waves of innovation. When the perceived opportunity is huge, money rushes in, often excessively, into both real businesses and the stock market.

So when people ask whether we are in a bubble, what they are really asking is: Is the bubble about to burst?

Because the truth is: Investors love bubbles. They just fear the endings.

Stock prices rise quickly during bubbles, often at breathtaking speed. What worries investors is the violent decline that follows.

And of course, bubbles contain layers of irrationality. There is no visible clock in the ballroom, so leaving the “Cinderella party” just before midnight is practically impossible. Emotionally, it’s also difficult to exit early, because the final stretch of a bubble is usually the most exhilarating, and the most profitable. Prices escalate sharply; this is the part of the night when the “lucky draw prizes” are handed out.

Still, people ask: How close are we to midnight?

I will offer my guess, though I could be completely wrong. Fortunately, our investment framework does not depend on predicting the exact timing of the bubble’s end.

My view: Yes, there is an AI bubble, but we may still be some distance from its bursting.

Looking Back: Lessons From the Dot-Com Bubble

A useful comparison is the Dot-com crash of March 2000.

1. Market Performance

Five years before the internet bubble burst, the Nasdaq rose ~550%. In the past five years, the Nasdaq is up ~150%. Large, but nowhere near the frenzy of 1995–2000.

2. Profitability

The internet pioneers of 1999 were largely unprofitable. By contrast, today’s AI leaders are hugely profitable.

The more speculative, unprofitable AI ventures are mostly still private, including OpenAI itself, which is expected to go public in 2H 2025. Nevertheless, if these private AI companies run into troubles, there will be contagion effect to the public ones.

3. Barriers to Entry

Starting an internet company in the 1990s required little capital. Starting an AI company today requires enormous resources, specialist talent, compute, data, resulting in much higher barriers to entry.

4. Smart Money Behaviour

Warren Buffett famously avoided internet companies during the Dot-com boom and refused to invest even at the peak of the excitement in 1999.

Recently, however, he invested US$4.5 billion in Alphabet, one of the central players in the AI revolution.

Taken together, today’s environment looks far less exuberant than the internet bubble at its peak.

The Greenspan Reminder

Alan Greenspan warned about “irrational exuberance” on December 5, 1996. Yet the bubble took another 3 years and 3 months to burst. During that time, the Nasdaq climbed another ~300%.

Being early is just as dangerous as being wrong.

Our Strategy: Participate, But Stay Grounded

Rather than trying to predict the exact bursting point, we rely on our timeless investment framework:

1. Keep AI exposure meaningful yet measured

Maintain a 5–15% allocation to AI-related equities, large enough to benefit, controlled enough to limit downside.

2. Rebalance regularly

As AI stocks rise, we take profits and channel them into:

• gold
• bonds
• high-quality companies in other sectors with good value

This ensures we stay invested without becoming overexposed.

Long-Term Success Doesn’t Require Crystal Balls

With this approach, we can confidently participate in the AI revolution—whether it continues for several years or begins to cool sooner than expected.

In the end, long-term success in investing doesn’t come from predicting the world without. It comes from cultivating the framework we build within.

Last week, global markets experienced renewed volatility following a sharp and unexpected escalation in U.S. trade policy. On 2nd April, the Trump administration announced sweeping tariffs on the imports of more than 180 countries, including a 34% additional tariff on all Chinese imports—a move far more aggressive than anticipated. Within 48 hours, China responded with a matching 34% tariff on U.S. goods. Canada has also taken retaliatory action, while the European Union has signalled potential countermeasures if negotiations falter.

What We Believe the U.S. Is Aiming to Achieve

In our view, the administration’s actions serve several strategic purposes:

• Reshore key industries by encouraging domestic manufacturing and reducing reliance on global supply chains
• Use tariffs as leverage in upcoming trade negotiations
• Increase government revenues to address fiscal imbalances without raising direct taxes
• Cool inflation by slowing economic activity, thereby giving the Federal Reserve scope to eventually reduce interest rates and ease the government’s rising debt-servicing costs

We believe this is a deliberate short-term shock, not a long-term policy reset. The intent appears to be forcing trading partners to the negotiating table. Over time, we expect a partial easing of tariffs, rather than full removal.

This strategy is consistent with Trump’s political playbook: implement the most disruptive measures early in the term and create space for recovery before the November 2026 U.S. midterm elections. As we move closer to that date, we anticipate more market- and economy-friendly policies, including:

• Moderating inflation
• Lower interest rates
• Tariff reductions from current levels

Possible Scenarios Going Forward

We are monitoring three key potential outcomes:

1. Negotiated Rollback (Most Likely)
   Trump has historically walked back aggressive stances once leverage has been achieved. This may follow the same pattern, especially under political and market pressure.
2. Congressional Pushback (Less Likely)
   While technically possible, a Congressional override would require a two-thirds majority—a high bar that would likely only be met under substantial economic strain.
3. Democratic Midterm Victory (Low-Probability, High-Impact)
   A decisive Democratic win in 2026 could bring legislative efforts to dismantle these policies, but only if the economic fallout becomes sustained and widespread.

Market Reactions So Far

• Equities: Global equity markets have seen corrections due to trade tensions
• Bonds: Yields have fallen as investors seek safer assets
• Gold: Has softened slightly after significant gains earlier this year

Our Outlook

We view this as a manufactured political and economic crisis, rather than a systemic one. The administration appears to be front-loading disruptive policies to give itself room to adopt more constructive ones later.

Importantly, we expect stimulus measures from other countries—whether fiscal or monetary—to help cushion the impact of tariffs. These collective efforts should support global liquidity and asset markets.

That said, we also recognise that some developments may reflect longer-term structural trends. Deglobalisation, growing geopolitical polarisation, and a shift towards economic self-reliance are likely to remain part of the global backdrop for the foreseeable future. These shifts could influence everything from global supply chains to inflation dynamics and capital flows—and we are factoring them into our portfolio positioning accordingly.

As such, while we expect the environment to become increasingly market-friendly as we approach the end of 2026, we are also mindful of the evolving structural landscape and the need to remain adaptable.

Portfolio Strategy

Periods of disruption often lead to opportunity. While short-term volatility may persist, we believe the medium-term outlook is more constructive, particularly if tariffs are eased and coordinated policy support emerges.

At the same time, we are incorporating more strategic resilience into our investment approach—positioning portfolios to navigate not only cyclical shifts but also longer-term global transformations.

As always, we are actively monitoring developments and adjusting our strategy as needed. We remain committed to helping you navigate these changes with clarity and confidence.

With thanks for your continued trust,

Unicorn InVesCo

The Chinese stock market has emerged as the best-performing major stock market in 2025 so far. Investors are increasingly optimistic, and the news surrounding Chinese equities has turned more positive. The Hang Seng Index has surged over 20% in just the first two months of the year. Notably, China’s ongoing Two Sessions meeting—its most important economic policy gathering—has further boosted investor confidence. Since the start of the meeting on 5 March 2025, the Hang Seng has appreciated by about 6%. We think Chinese equities have yet fully realised their value even with the recent price appreciation.

A Shift in Market Sentiment

In recent years, many major financial institutions expressed caution regarding Chinese equities, with some even labelling them “uninvestible.” Despite this widespread scepticism, we at Unicorn remained steadfast in our conviction, particularly as Chinese stock prices declined. As value investors, when we hear terms like “uninvestible,” it signals a potential opportunity—prompting us to investigate whether a misunderstood gold mine lies beneath the pessimism.

Contrarian Investing: Our Strategic Approach

In November 2023, when market sentiment was overwhelmingly negative and the Hang Seng was hovering around 17,500 points, we saw an opportunity. At that time, we increased our allocation to Chinese equities by 15% within our advised funds portfolio, where our investors practise dollar-cost averaging. Today, with the Hang Seng Index above 24,000 points—almost 40% higher than our entry point—our decision has proven rewarding.

Why We Stayed Committed While Others Exited

While many major institutions were exiting Chinese equities, we remained steadfast in our investment approach. Our reasoning was rooted in two key principles:

1. Price vs. Value: As Warren Buffett famously said, "Price is what you pay, value is what you get." We analysed the profit trends of Chinese companies and found that, despite price declines, many businesses maintained or even increased their intrinsic value.


2. Economic Understanding: We recognised that China was undergoing a critical transition and deleveraging phase. While this meant slower near-term growth, it also set the stage for a more robust long-term economic foundation.

Selecting the Right Chinese Equities

Understanding the economic transition, we carefully selected and invested in the right types of Chinese equities whenever we can:

• Initial Focus on Safe Dividend-Paying State-Owned Enterprises (SOEs): Knowing that stock prices might remain depressed for 3-5 years, we invested in resilient state-owned companies offering generous dividend yields. Dividend yields during our initial investment were of 8-12% per annum due to the depressed stock prices. These investments proved highly rewarding, delivering returns of 50-100% over the past couple of years.


• Gradual Shift to Growth-Oriented Private Enterprises: As the Chinese government introduced proactive stimulus measures, we progressively reallocated investments from SOEs to faster-growing private enterprises, particularly in sectors that the government aims to promote.

Navigating the Journey Skilfully

Understanding the economic transition, we carefully selected and invested in the right types of Chinese equitBeing a value investor and an investment adviser seeking value-oriented opportunities for our investors is no easy feat. We must have the patience and conviction to stay invested while the news remains overwhelmingly negative. What helped us navigate this journey:ies whenever we can:

• Commitment of our family wealth managers and trusted investors to build trust and relationships over the years, forging a strong foundation of mutual confidence.


• Ongoing mutual learning of our investors to gain financial wisdom and maturity, allowing them to appreciate the truth instead of just reacting to news.


• Dedication to constant communication to help our investors understand our thinking and the status of their investment portfolios, ensuring clarity and alignment in decision-making.

Conclusion: The Art of Value Investing

As value investors, we recognise that not all price declines create buying opportunities. Some signal hidden risks that require swift exit strategies, while others present remarkable investment potential. The key lies in thorough research and skilful navigation. As stewards of our investors’ capital, we see ourselves as careful drivers, guiding them along the most efficient path to their financial goals while avoiding the dangerous potholes along the way.

Certified Advanced Financial Planner (CAFP)

The CAFP designation represents a mark of distinction earned by a select few within our firm who have demonstrated exceptional technical proficiency, strategic thinking, and commitment to investor success.

Out of the hundreds of professionals trained over the years, only three have attained this rigorous certification—testament to the high standards and deep expertise required. CAFPs are often called upon by fellow practitioners across the firm to support key investor engagements, where they conduct in-depth financial diagnostics and develop tailor-made blueprints with solutions that are both precise and easy for investors to embrace.

In addition to their advisory role, CAFPs also lead the development of internal training curriculum, and set a strong example through the way they run their professional practices.

The CAFP designation is not an exam-based certification—it is a recognition earned through real, on-the-ground experience. It affirms those who have consistently walked alongside investors, helping them navigate complex financial challenges with clarity and care. More than a title, it’s a validation of meaningful impact, earned through mileage, not just modules.