Let's see if I can still post: 2025 Year in Review

The return in 2025 is 32.93%, over twelve years of market entry, with annual returns as follows:

2013 0.01%
2014 88.06%
2015 30.70%
2016 23.86%
2017 20.04%
2018 -10.84%
2019 20.97%
2020 -7.01%
2021 18.60%
2022 19.66%
2023 18.34%
2024 44.22%
2025 32.93%

Total net value: 11.84, annualized return: 22.84%.

This year, I personally feel there has been no improvement in any investment system, so I haven’t written any theoretical articles. It’s still a diversified, undervalued style of investment plus some arbitrage positions, aiming to maximize resistance to unknown risks. As the capital grows larger, the level of risk far exceeds the measure of returns. When communicating with others, if they ask how much they can earn, I can generally tell they are a novice. If they ask about risks or the mathematical expectation, then I know they are just beginning to understand investing.

A year of excessive losses can seriously impact the final annualized return. I once gave an example: taking five years, A earns 50% each year for four years but loses 40% in one year; B earns 25% annually. Ultimately, B’s annualized return is still higher than A’s. However, from an external perspective, many people believe A’s “stock god” status is greater than B’s. The source of excess returns always comes with a long-tail cognitive effect, just like value investors exploit the group’s judgment of greed and excitement, and Buffett-style investors leverage the group’s judgment of high ROE accumulated over time.

In early April, during the 125% tariff war, the Hang Seng Index plummeted 13% in one day. I used some arbitrage positions to urgently buy into non-ferrous metals stocks, which ultimately yielded 3-4 times the return. It proves the saying: when others are fearful, I am greedy.

Overall, 2025 remains a year of value reversion. Holding stocks feels quite comfortable in a normal sense, but from a rational perspective, risks are increasing. The risk comes from the high valuation of US tech stocks, and this risk will persist into 2026.

In 2026, the AI bubble may still not burst, but investing cannot rely on luck; we can only continue to observe. US stocks like SPACs and OPENAI may go public. Before that, there is still strong motivation for funds to stay in US stocks. It has been 19 years since the last financial crisis began, and 17 years since it ended. Many new money investors have long forgotten this memory and are rushing toward the unreturnable road with the ever-rising funds of the lighthouse. The current situation is very similar to the Nasdaq bubble 27-28 years ago. I strongly recommend everyone review that history—how the myth of increasing website market value ultimately led to a 77% drop in the Nasdaq index. Currently, AI also shows many characteristics detached from commercial fundamentals. It may not seem strong enough yet, but the direction is clear. Continued observation is needed.

In 2026, there may be significant divergence between non-ferrous metals and precious metals, but due to insufficient early investment and the long production cycle, there is at least a possibility of high-level consolidation. This is my personal view. For companies, some with special resource endowments are still worth holding, though their valuations have already increased. It’s reasonable to sell rather than buy; as long as they dare to rise, they dare to sell.

Oil and gas stocks represented by CNOOC and PetroChina have good valuations, and oil prices are still not high, so long-term holding is advisable.

Power generation stocks are a bit complicated. My understanding is that they have been misjudged and should continue to be held.

Another important focus in 2026 is stocks in consumer staples like food and beverages. The deflationary environment is still unfavorable for them, but some companies still have bright spots. Look for opportunities based on dividend yields (currently almost none).

Additionally, those familiar with me know I have long believed in a 20-year cycle of RMB appreciation. In recent years, due to the strong US dollar index, the RMB against the dollar has depreciated (but remains one of the strongest currencies globally). This trend has been accompanied by a significant reduction in foreign reserves, indicating that RMB independence is strengthening, forming a certain “regional tilt” capital flow within Greater China. If the RMB does not appreciate, such a large trade surplus is unlikely to be sustained long-term, which is a good thing for Chinese assets. The Hang Seng Index and RMB exchange rate are strongly correlated. In the short term, fluctuations around 6.5-7.5 are normal; long-term, I believe an exchange rate of about 1 to 5 against the USD might be reasonable.

Risks in 2026 are increasing, but one should not arbitrarily significantly reduce positions. Opportunity cost is the biggest cost, and rational quantitative judgment is the fundamental basis.