Annual Letter 2025 – “What to do when the bubble bursts?”
In this year’s Annual Letter, Charles reflects on the striking parallels between today’s AI-driven market enthusiasm and the dot-com bubble of the late 1990s. Drawing on history, data and first-hand experience, he explores the behaviours, valuations and structural forces that characterise investment bubbles, why they eventually burst, and what tends to perform best in the aftermath. The letter argues that while AI is a genuine technological revolution, expectations and capital allocation have once again run ahead of reality, creating risks for concentrated, momentum-driven strategies. Looking beyond the bubble, it sets out why quality, valuation discipline and overlooked areas such as SmallCaps have historically been well placed to recover when leadership changes and markets mean-revert.
The Annual Letter is available here.