Global investor sentiment has notably shifted from the exuberance seen at the start of the year to a more cautious stance by mid-June.
Looking back a few months, overseas markets, driven by AI, saw consecutive record highs in Japanese, South Korean, and U.S. stocks. The Nikkei 225 reached a historical peak around 66,000, the KOSPI climbed above 9,000 points, and the Nasdaq surged from near 20,000 to a high of around 27,000. However, the pace has clearly changed since June began. With repeated delays in expectations for Federal Reserve interest rate cuts, markets have entered a phase of "volatile digestion."
Domestically, the technology theme has rotated among AI computing power, semiconductors, robotics, and commercial aerospace, while traditional blue-chip stocks have continued their persistent decline. Although this is described as a bull market, generating returns is not straightforward.
With the first half of 2026 now behind us, many investors at this juncture fear both missing out and buying at peaks, unsure if their asset allocation plans from the start of the year require adjustment.
Overseas Markets: Volatility and Opportunity After New Highs
Japanese and South Korean indices have nearly doubled from their March lows, and U.S. stocks have also hit record highs. Is it still possible to enter now? Should those already holding positions take profits?
This is currently the most frequently asked question. First, here is a personal assessment: overseas markets in June and July will not set new highs daily as they did in April and May. They are entering a phase of "volatile digestion." There are three main reasons for this.
Firstly, the core AI sectors, represented by memory chips, have seen excessive short-term gains. Japan's index rose from 40,000 to 66,000, South Korea's from 5,000 to nearly 9,000, and the U.S. Nasdaq from 20,000 to 27,000. Even the best assets need a breather after nearly doubling in a short period.
Secondly, expectations for Federal Reserve rate cuts have been pushed back. In March, the market widely anticipated a 25-basis-point cut within the year, but the Fed's policy meeting on June 17-18 is likely to completely dispel this expectation. The core factors are high oil prices combined with ongoing U.S.-Iran tensions, leading to higher-than-expected inflation pressure. Global monetary policy is tightening marginally overall, not easing.
Thirdly, a wave of large IPOs is hitting the U.S. market, and with U.S., Japanese, and South Korean stocks simultaneously at historical highs, the momentum for further buying is insufficient. It's like reaching the summit of a mountain where the air is thin, requiring a pause to catch one's breath.
So, what should existing holders do?
If you added to Japanese and South Korean positions in March as suggested and were reminded in mid-April, you should have already taken profits, selling the overweight portion to return to a balanced allocation. Now, maintaining a basic core position is sufficient; there's no need to liquidate everything due to short-term fluctuations.
What about those with no overseas allocation at all? Using 1 million as an example, you could first establish a 30% base allocation—balanced across the U.S., Japan, South Korea, and Hong Kong.
Do not fantasize about "waiting for a big dip to enter." Over the past three years, those shorting the U.S. market waited from 16,000 to 27,000 points, and when a real decline came, they dared not buy. For the remaining 70%, follow the principle of "buying a little on small dips and considering phased additions on significant declines" through dollar-cost averaging. Currently, QDII funds are still subject to purchase limits, so wanting to buy more may not be possible.
Is the AI Bubble About to Burst?
Discussions about an imminent AI bubble collapse are increasing in the market, reminiscent of the 2000 internet bubble. What is the perspective on this?
The current AI sector is far from being in the late stages of a bubble, let alone on the verge of collapse. It is fundamentally different from the 2000 U.S. tech bubble.
First, the profit logic is entirely different. Before the 2000 bubble burst, the market exhibited a typical divergence of "soaring stock prices and flat earnings," with stock speculation completely detached from actual corporate profits. In contrast, the current rise of core AI companies like the U.S. "Magnificent Seven," Samsung Electronics Co Ltd, and SK Hynix Inc is largely driven by earnings. Even after a significant rally, SK Hynix Inc's current P/E ratio is only around 10 times, placing its valuation in a reasonable range with no signs of exaggerated froth.
Secondly, industry momentum is worlds apart. Seven months before the 2000 internet bubble peak, global PC shipments had already peaked, indicating exhausted growth potential. Currently, market sales for AI computing power, servers, and storage equipment have not peaked, and their growth rates have not yet reached their maximum, leaving ample room for industry expansion.
Finally, AI penetration remains very low. The adoption rate among U.S. enterprises is currently less than 20%, whereas at the time of the internet bubble burst, PC and internet penetration had reached 80%. Many enterprise applications, like Alibaba's Wukong and Tencent's Workbuddy, are unheard of by many. The potential is vast.
Therefore, the adjustment in June and July is a phase of "volatile digestion," not a "bubble collapse."
If a rapid decline similar to March occurs, it would present an opportunity for those not yet allocated. But remember, opportunities are prepared for those with a core position—having established that 30% base gives you the ammunition to add on dips.
Hard Assets: Strategies for Precious Metals, Oil, and Copper
Gold has fallen from a high of $5,500 to around $4,200. Should one cut losses or add to positions now? What about silver?
Gold is now within a new equilibrium price range. With the delayed rate cut cycle, the short-term upward momentum for gold is indeed diminishing—consistent with the advice given under significant pressure late last year to "avoid chasing above $5,000."
However, from a medium-to-long-term perspective, gold's upward trend is not over. A key signal is that the People's Bank of China has increased its gold purchases after the price dropped from $5,000 to the $4,000s. With increased foreign exchange reserves, the options are essentially U.S. Treasuries and gold. Delayed rate cuts mean U.S. Treasuries won't rise either, so continuing to buy gold is preferable.
Additionally, from a personal perspective, the cost-effectiveness of copper allocation deserves attention over the next 1-2 years. Silver, as a satellite to gold, lacks independent market trends. Without gold entering a clear uptrend, silver is unlikely to stage a strong rally.
Is There Still Opportunity in Oil?
Is there still opportunity in oil? Recently, there have been suggestions that "many countries' oil reserves are running low, which could trigger a surge."
The complete cycle of oil rising from $60 to $120 has fully played out, and the trading loop is officially closed. There is no need for excessive further expectation.
The news about "depleted strategic oil reserves in various countries" is already a widely known consensus in the public domain. Capital markets always follow an iron rule: when a positive development is known to everyone, it ceases to be a money-making opportunity and instead likely represents a risk.
Copper Prices vs. Copper Stocks
Copper prices have been hovering near record highs, so why have the stock prices of domestic copper companies continued to fall? Should one invest in the metal itself or in copper stocks?
The relationship between copper prices and copper stocks is like a person walking a dog. The copper price is the person, and the stock price of copper companies is the dog. The person keeps walking forward; the dog sometimes runs ahead and sometimes lags behind, but in the long run, as the person moves forward, the dog will follow.
Temporary divergence is normal. Rising copper prices coupled with falling copper stock prices precisely indicate that—if you are bullish on copper's long-term logic—the current stock decline presents a布局 opportunity.
However, a reminder is necessary: for copper allocation, it is better to invest directly in the metal itself rather than in stocks. Stock prices are influenced by multiple factors including A-share market sentiment, company fundamentals, and index composition, resulting in a non-linear relationship with commodity price movements.
A-Share Technology: Unchanged Themes, Rotating Sectors
Optical modules have risen too much to dare buying. Among robotics, semiconductors, and commercial aerospace, how should one choose?
The four major themes for technology investment this year have never changed: AI computing power, semiconductors, robotics, and commercial aerospace/satellite communications. These are the main themes of this bull cycle; there is nothing new.
But pay attention to rotation节奏. The stock market has an "impossible trinity": strong current earnings, high future growth rate, and low valuation—these three cannot be satisfied simultaneously.
Last year, only optical modules achieved a closed loop, leading to a frenzy of capital inflow. Currently, optical modules still hold two advantages: "strong current earnings + high future growth rate," so capital continues to flow in, but the sector has become excessively hot.
At this point, capital will试探 other directions: memory chips, humanoid robotics (catalyzed by the impending IPO of Unitree Robotics), and commercial aerospace (with frequent recent satellite launches). If you currently have no technology exposure and want to enter, allocate less to AI computing power and more to the other three areas.
But do not attempt to "pick the single best one among the four."
Let me reiterate: most people do not possess this ability. The one you pick will likely be the worst performer. Balanced allocation is the wisdom of appearing foolish; acknowledging your limitations can反而 lead to profits. Allocate less to sectors that have risen significantly in the short term and more to those that have lagged. It's that simple.
Hang Seng Tech and Legacy Tech Giants
The Hang Seng Tech Index has been stagnant. Have Tencent Holdings Ltd and Alibaba Group Holding Ltd become "old-timers"?
The Hang Seng Tech Index is often "the worst choice most easily selected" in overseas allocations. Why? Because many people, upon entering the market, see that U.S., Japanese, and South Korean markets have risen while it hasn't, so they buy it. But those who bought six months ago thought the same—and it still hasn't risen after half a year.
First, an overseas allocation should include Hang Seng Tech, but it should not consist solely of it. A balanced allocation across the U.S., Japan, South Korea, and Hong Kong is the wisdom of "admitting weakness," not a "confident" gamble.
Secondly, labeling Tencent Holdings Ltd and Alibaba Group Holding Ltd as "old-timers" is an incorrect judgment. They are not outdated; you will soon see them launch strong products in both the consumer and enterprise AI application spaces. The leaders in AI application companies will ultimately be firms like Tencent Holdings Ltd and Alibaba Group Holding Ltd.
Additionally, the Hang Seng Tech Index has a composition issue: newly included companies (like Zhipu AI) often enter when valuations are high, providing limited contribution to the index. Precisely because of these issues, it is currently so cheap. Cheapness presents an opportunity, but do not go all-in.
Foundational Investment Logic: Mindset, Discipline, and the Source of Gains and Losses
There is consistent emphasis on "always being fully invested and taking profits regularly." With a market adjustment seemingly imminent, why not sell everything first and buy back after the decline?
This relates to the concept in the Tao Te Ching: "Advancing the Way seems like retreating." You might think selling everything to wait for a dip and then buying back is a faster method, but in reality, you cannot execute it. If you could accurately predict tomorrow's movements, turning 100,000 into 100 million in a year would be possible, but no one can, proving this path does not exist.
"Always being fully invested" maintains participation感 during a bull cycle, preventing you from missing out. "Taking profits regularly" means extracting profits—say, every 10% gain—and depositing them into fixed income or insurance,坚决 not reinvesting them. As the market rises, your principal is gradually withdrawn, leaving only profits in the market. Only this approach allows you to maintain true calm amidst future volatility.
Managing Investment Anxiety
After buying, constantly checking price fluctuations causes significant anxiety. What should be done?
The Heart Sutra states, "With a mind free from hindrance, there is no fear." If your investment logic is sound after purchasing an asset, not checking for ten days or half a month is inconsequential, unless major events like war or drastic policy changes occur that could alter the underlying logic.
I suggest practicing this: after buying any asset, first write down "why I bought it" in a notebook. When犹豫 whether to sell after a sharp drop, refer back to it—is the original买入 logic still intact? If the earnings growth logic for memory chips remains, a 40% drop is an opportunity. If memory chip prices have halved and there is overcapacity, even a 40% loss warrants selling.
Do not ask whether it will rise or fall tomorrow; ask if the买入 logic still holds. This is the hallmark of入门 investment.
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