However, we should not just celebrate the harvest, but also watch the weather for the next season. There is an old saying in our industry: “Markets move in cycles. Some just last longer than others.”
While AI is transforming the world, much like the railway boom of the 1840s, human psychology remains unchanged. Greed and fear still drive markets. History suggests we are entering a period that requires not just optimism, but careful preparation.
The history of the 10-times club (and why it matters)
Bubbles are usually recognised only after they burst, yet history shows a pattern: nearly every major asset class that appreciates more than 10-fold eventually faces a harsh reality check.
See also: One swallow does not make a summer: China’s AI IPOs excite, but uncertainty lies ahead
Let’s take a look at the Hall of Fame of past booms:
- Gold (1970–1980): Prices rose approximately 24 times due to inflation fears, before declining by around 65% over the subsequent two years.
- Japanese equities (1980–1989): Broad market indices rose 6 times, while bank stocks climbed 10 times, only to fall by more than 80% during the “Lost Decade”.
- Dot-com boom (1990–2000): The dot-com boom saw technology shares rise more than 15 times, followed by a 78% decline in the Nasdaq.
- Commodities & oil (1998–2008): Driven by China’s growth, prices surged 12 times before collapsing by roughly 75% within six months.
- US stock market (2009–present): The US market has now surpassed the 10 times mark once again.
Does this mean a crash is imminent? Not necessarily — the most explosive gains often occur in the final blow-off phase. We are staying on the train, but with seatbelts fastened.
See also: All signs point to recovery as real estate markets gain momentum in 2026: Nuveen
What is the smart money doing?
When in doubt, look to the masters. Warren Buffett is widely regarded as the greatest investor of the last century. Since 1964, Berkshire Hathaway has grown at approximately 20% per annum, roughly twice the return of the US market. So what is the Oracle of Omaha doing today? Is he buying into the rally? No — he is selling.
Public disclosures show that Buffett was holding a record US$325 billion ($418 billion) in cash, a figure that has since risen to over US$380 billion. In reality, cash is not a mattress to sleep on; it is a weapon. Buffett understands the limits of foresight and exercises the discipline to invest only within his circle of competence.
In the late 1960s/early 1970s, he sat on cash during market peaks before acquiring high-quality businesses post-crash.
During the late 1990s dotcom bubble, he bought traditional businesses like Benjamin Moore Paint and MidAmerican Energy, which proved to be a great investment after the bubble burst.
In 2008, during the Global Financial Crisis, Berkshire Hathaway deployed capital into companies such as Goldman Sachs and General Electric, generating substantial long-term returns.
The Japanese masterclass
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In 2020, Buffett invested heavily in Japan’s Sogo Shosha trading houses using low-interest yen loans to buy high-dividend companies. Dividends (around 2%) covered interest rates (around 0.6%), creating a profitable arbitrage.
Singapore, like Japan, is an island nation with no natural resources. Its high-quality companies offer reliable dividends of 4%–5% in 2025, exemplified by Singapore dividend stalwarts. Compare this to the Singapore 10-year bond yield of 2.3%. Go figure.
The elephant in the room: The global debt trap
Why the caution despite optimistic US markets? The answer is debt. Global debt stands at US$350 trillion; US debt-to-GDP ratio has risen from 35% in 1980 to over 120% today. Governments often resort to printing money to keep the system afloat.
As American economist Ben Bernanke stated in 2002: “The US government has a technology, called a printing press… that allows it to produce as many US dollars as it wishes at no cost.”
This means politics often drives prices. To protect your portfolio, we focus on assets governments cannot print, such as gold, silver, and copper.
Our strategy: Participate in the boom, prepare for the bust
Given high stock prices, high debt, and political uncertainty, our portfolio strategy focuses on three pillars: hard assets, resilient income, and contrarian growth.
- Gold: The anti-fiat insurance
Gold is a currency no government can debase, with a 5,000-year-old history as a store of value. Central banks, including China, India, Poland, and Turkey are major buyers, with gold comprising roughly 25% of reserves. Physical gold in safe jurisdictions like Singapore ensures possession during crises.
- Income assets: Generating returns while waiting
With the era of ultra-low interest rates largely behind us, income-generating assets have regained relevance. Money market instruments and short-duration fixed income provide relatively low-risk returns while offering liquidity and flexibility.
Demographic trends further reinforce the importance of income. In Singapore, approximately one in five residents is aged 65 or older, a figure projected to rise to one in four within the next five years. This shift has increased demand for steady income streams rather than speculative growth. Singapore REITs and quality dividend-paying equities continue to attract interest due to their potential to deliver regular income alongside modest capital appreciation.
The contrarian play: China’s survivor economy
China remains a polarising market for global investors. While segments of the traditional economy, such as real estate and infrastructure, continue to face structural challenges, other areas are showing resilience. Advanced manufacturing, artificial intelligence, green energy and electric vehicles represent pockets of growth within what some describe as a “K-shaped” economic transition:
- The downward arm: Old Economy (real estate, infrastructure) continues to face struggles
- The upward arm: New Economy (AI, advanced manufacturing, green energy, EVs) continues to thrive
As seen in Japan in the 1990s, after the stock market bubble burst, global export-oriented champions like Toyota and Nintendo performed well, while the property and banking sectors continued to struggle. We believe China will produce global dominant players despite its ongoing real estate challenges.
Based on this view, we deliberately positioned exposure toward structural winners (the AI and industrial leaders), while avoiding weaker real estate players and over-leveraged banks. This contrarian stance required conviction amid pessimism, but history suggests that opportunities are often greatest when fear is most pronounced.
Since establishing this positioning around the market lows in 2024, it has delivered meaningful appreciation, and we believe the longer-term opportunity remains intact. It is also important to remember that equity market performance often diverges from broader economic conditions.
Looking ahead
Markets tend to reward optimism, but sustained success often depends on preparation rather than prediction. Income-oriented assets address the needs of an ageing global population, hard assets help hedge against rising debt and monetary expansion, and cash equivalents provide optionality during periods of uncertainty.
Enjoying market gains need not come at the expense of prudence. A balanced approach that blends growth, income and defensive assets allows investors to remain engaged in opportunities while maintaining resilience across changing market conditions.
Jeffrey Lee is chief investment officer at Phillip Capital Management
