Monthly Letter | 16 October 2025 | Chief Investment Office GWM, Investment Research
UBS House View
Monthly Letter | 16 October 2025 | Chief Investment Office GWM, Investment Research
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AI-linked stocks over the
coming year amid robust capex trends and rising demand.
Beyond AI, we see addi-
tional supportive factors for equities, including better- than-expected US economic growth and lower US interest rates.
Amid all the questions
about AI, investors should stay focused on their long- term financial goals and ensure their portfolios are well diversified.
We upgrade equities to
Attractive. Regionally, we like the US, Japan, and China. We also favor qual- ity bonds and gold.
Twenty-six years ago, in the fall of 1999, I sat, as I do today, writing to clients
about our investment positions in an era of tech stock euphoria. In 1999, I thought tech enthusiasm was overdone, and I am going to argue the opposite in this letter.
Yet before I get to our current positioning, I want to point out that the dotcom
bubble made a fool of almost everyone at some point. This AI euphoria will likely do the same. During the dotcom era, getting out too early had what felt like disastrous consequences: Between the start of 1995 and March 2000, the Nasdaq Composite increased almost sevenfold. Getting out too late also felt disastrous: The Nasdaq fell almost 80% from its peak before bottoming in 2002.
But while it was almost impossible not to get things badly wrong at least for a
time, it was also not impossible to survive and prosper. When the Nasdaq started to plunge in 2000, US REITs, Treasuries, gold, and oil traded flat or higher. Furthermore, by the time the bubble was all said and done, it still hadn’t paid to go against the internet. Between the start of 1995 and the end of 2002, the Nasdaq Composite delivered a respectable average return of 7% per year. What do these lessons hold for today? First, it’s nearly impossible to time the market just right; investors should make sure the success or failure of their long-term plan is not dependent on doing so. An important part of this is staying focused on one’s investment goals.
Second, in the end, missing long-term trends can be far more painful than endur-
ing short-term drawdowns. The dotcom bubble and crash look like a blip on the chart from today’s vantage point.
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Please see important disclaimers and disclosures
at the end of the document.
