Change has come swiftly in 2025. A combination of internal and external forces has created a wild ride in the markets—one that has left indices only moderately higher than where they ended in 2024. And yet, 2024 already feels like a distant memory. A new administration has brought radically different policies—or in many cases, a complete lack of them—resulting in erratic market movements largely driven by the actions of a single individual.
The tariff trade has been a defining theme over the past six months. Trading around the will-they-or-won’t-they nature of tariff announcements has served us well, but it has also unleashed widespread global disruption. At Optimist Capital, we don’t argue that tariffs are inherently bad—like any tool, they can be useful when deployed wisely. That said, we tend to align with Warren Buffett’s view: trade should not be used as a weapon. Instead, we should embrace the principle of specialization—the idea that those who are best at producing a particular good or service should focus on doing just that.
In economics, this is known as comparative advantage. Every individual, company, and nation has unique strengths. When we try to cover too many bases instead of focusing on what we do best, we usually fail—or at the very least, become inefficient. History shows that some of the greatest leaps in progress have come through specialization and revolutionary processes. Take the modern automobile: its mass production ushered in the era of mobility, with each worker on the assembly line mastering a specific task. This specialization led to faster, more efficient production with fewer errors.
So where are we headed next? The answer is straightforward: you can’t fight the future, and if you ignore history, you’re doomed to repeat it. Tariffs once played a role in liberating us from England, but they also contributed to the devastation of the Great Depression. We already know that comparative advantage leads to broader success. That means the return of large-scale manufacturing to our shores is unlikely—it’s simply not our edge.
Instead, our comparative advantage lies in intelligence, education, research, and innovation. Over the last 30+ years, many of the world’s most impactful ideas and technologies were born here in the U.S. While we may outsource production, we own the innovation and intellectual capital. Trying to reverse this dynamic would not push us forward—it would set us back, forcing us to relive mistakes we should have already learned from and moved beyond.
