Analysis of Key Reasons for Poor Investment Returns in 2025 and Loss-Making Decisions

From a global market perspective, major U.S. stock indices all recorded significant positive returns in 2025, such as the S&P 500 rising approximately 17.04%, the Nasdaq up about 21.01%, the Dow Jones Industrial Average increasing around 13.75%, and the Russell 2000 gaining roughly 12.38%[0]. This indicates that the main causes of poor returns are structural/strategic factors rather than systemic declines in the broader market. Based on comprehensive data and reports, the four most likely categories of loss causes are as follows:

• The U.S. Dollar Index fell approximately 10% during the year, making it one of the weakest-performing major currencies[1]. If positions are denominated in USD, long USD positions are held, or the cash proportion is too high, they will underperform relative to non-USD assets.
• Drivers of USD weakness: The Federal Reserve started a rate-cutting cycle, combined with uncertainty from tariff expectations, suppressing the attractiveness of the USD[1].

• AI and tech stocks continued their overall strength in 2025, but starting from the fourth quarter, the contradiction between valuation and profit realization rose, and market discussions about the ‘AI bubble’ increased. Some high-valued AI and growth stocks saw significant pullbacks[2][3].
• Index level: The forward P/E ratio of the S&P 500 rose to approximately 23x, and the tech sector was even higher at around 30x, which is at a five-year high, increasing the risk of valuation correction[2].
• Cases and reports: The CEO of Goldman Sachs warned that the AI boom may cause valuations to decouple from fundamentals, and there is a 10%-15% correction space for U.S. stocks in the next 12-24 months[2]. Some institutions suggest that if profit realization falls short of expectations, valuation pressure will be more significant.

• The cryptocurrency market was highly volatile overall in 2025. Major coins (such as Bitcoin) once fell below $90,000 and erased all annual gains, causing significant drawdowns for those who chased highs or held concentrated positions[4].
• Related strategies: Some companies sought returns by allocating cryptocurrency assets or issuing digital asset-related products, but with market corrections, these strategies saw significant drawdowns. Reports show that about 70% of some digital asset strategies suffered losses at the end of the year[4].
• Risk points: High volatility combined with leverage or asymmetric positions can easily amplify losses.

• Biopharmaceutical event risks: For example, some biotech companies’ stock prices plummeted due to key clinical trial failures, and related individual stocks fell sharply in the short term, causing severe losses for investors with overly concentrated single positions[0].
• Meme stocks and concept stocks pullback: Against the backdrop of tight liquidity and valuation regression, some highly hyped ‘meme stocks’ or small-cap concept stocks with weak fundamentals saw significant pullbacks, damaging short-term speculative strategies[1][3].
• Structural differentiation in the U.S. bond market: Although U.S. bonds delivered a return of approximately 5.8% in local currency terms for the year, outperforming the top 15 global sovereign bond markets[5], incorrect positioning (such as shorting U.S. bonds or mismatching duration) could also lead to drawdowns.

• Concentrated chasing of AI and growth stocks at high valuations: Continuing to increase positions when forward valuations are far above the average, lacking an assessment of the pace of profit realization, and passively enduring drawdowns during the valuation correction phase.
• Aggressive allocation and leverage strategies for cryptocurrencies: Taking heavy positions or using leverage near highs, not reserving drawdown buffers and risk management space, and being impacted by severe volatility.
• Ignoring macro and exchange rate risks: Still going long on USD or holding excessive cash when the Federal Reserve started rate cuts combined with trade policy uncertainty, contrasting with the performance of non-USD assets and commodities (such as gold).
• Lack of diversification and concentrated event exposure: Concentrating positions on individual event-driven stocks or themes (such as single drugs, single tracks, or speculative themes), and bearing concentration risks once major negatives occur (clinical failures, regulatory or public opinion reversals).

• Diversify asset allocation to reduce exposure to single themes and single assets.
• Focus on the match between valuation and profit, avoid concentrated chasing at extremely high valuations, and adopt phased positioning or dynamic rebalancing.
• Preset drawdown and position limits for high-volatility assets (such as cryptocurrencies, small-cap themes) to avoid excessive leverage.
• Attach importance to macro and exchange rate hedging, and build a more robust portfolio by combining bonds, commodities, and non-USD assets.
• Conduct regular reviews and stress tests, and establish a profit-taking, stop-loss, and position management system.

If you are willing to provide more specific position and transaction records, I can conduct a trade-by-trade review and attribution for you based on historical prices and event timelines, and give more personalized improvement plans (welcome to enable the ‘Deep Research Mode’ for more detailed data and chart backtesting analysis).

References:
[0] Jinling API Data (2025 Market Index and Industry Performance)
[1] Business Insider - “Impact of USD Depreciation on Ordinary Americans” (https://www.businessinsider.com/weak-us-dollar-usd-decline-impact-on-americans-inflation-2025-12)
[2] Yahoo Finance - “U.S. Stock Seasonal Rally Starts! Experts Warn of Overvaluation, AI May Become a Double-Edged Sword” (https://hk.finance.yahoo.com/news/美股旺季行情启动-专家示警估值过高-ai恐成双面刃-022305219.html)
[3] Yahoo Finance - “Lakoo Investment | AI Stocks Still Buyable Next Year Before Bubble Bursts” (https://hk.finance.yahoo.com/news/拉阔投资-泡沫未近爆破时-ai股明年仍可买-001536588.html)
[4] Yahoo Finance - “From 2600% Surge to 86% Evaporation: The Hottest Crypto Trade Collapses” (https://hk.finance.yahoo.com/news/从暴漲2600-到蒸發86-加密圈最熱門交易走向坍塌-153126217.html)
[5] Yahoo Finance - “Surprising! U.S. Bonds Outperform Top 15 Global Sovereign Bond Markets This Year” (https://hk.finance.yahoo.com/news/跌破眼鏡-美債今年來表現-超越全球前15大主權債市-220002794.html)