Q1 2025
April 15, 2025
The year began with optimism. The S&P 500 opened 2025 priced for a scenario that suggested moderate economic growth, the potential for regulatory easing, and perhaps a continuation of business-friendly tax policy. But as we approach mid-April, the landscape has shifted dramatically. Uncertainty and volatility have taken center stage, and investors are beginning to grasp the magnitude of a global economic transformation that’s been years in the making.
What we’re witnessing is nothing short of a sea change in the structure of the global economy—a shift from decades of open-market globalization toward something more fragmented, cautious, and strategically selective.
While recent headlines emphasize tariffs, the shift in global trade has been developing over many years. Early indicators included the Trans-Pacific Partnership under President Obama, followed by tariff policies introduced under President Trump in 2018. The COVID-19 pandemic greatly accelerated this shift, revealing critical vulnerabilities in global supply chains.
In response, the U.S. passed the CHIPS and Science Act in 2022, designed to reshore critical manufacturing and reduce reliance on foreign production. The trajectory continued on April 2nd of this year, when President Trump announced a new set of tariffs—reportedly the highest in U.S. history. While many of those tariffs are now on a 90-day review pause, they mark another step toward redefining global trade.
Tariffs are only part of the story. This reflects a broader recalibration. We are transitioning from an era of unfettered globalization to one of strategic autonomy, supply chain resilience, and selective cooperation. As Ray Dalio, Founder of Bridgewater Associates—the largest hedge fund in the world—has observed, we are entering a rare moment in history when the foundational systems of the global economy—monetary, political, and geopolitical—are being reshaped in real time.
In just the past week, we’ve seen U.S. bond markets experience sharp swings, the dollar weaken, gold reach record highs, inflation concerns mount, and consumer confidence decline sharply. Recession fears are rising—not necessarily because of economic data, but due to uncertainty about what might come next. China’s decision to allow the yuan to fall to a 17-year low has raised fears of a currency war, and rumors of small-scale U.S. Treasury sales by Chinese entities have sparked concerns about the future of the dollar as the global reserve currency.
So where do we go from here?
We remain grounded in the belief that sound business fundamentals and disciplined investing are the most reliable guides in uncertain times. Many of the companies in your portfolio are best positioned today for global scale and operational flexibility. While their stock prices may fluctuate alongside market sentiment, their underlying capabilities equip them to manage disruption better than most. We will look for sound opportunities as valuations compress.
As Howard Marks, co-chairman of Oaktree Capital Management and one of the most respected voices in investing, reminds us, “There is no place for certainty in the world of investing—and that’s particularly true at turning points and during market upheaval.” If we waited for perfect clarity, we’d never act—and history has shown that inaction is rarely rewarded. A disciplined framework, grounded in logic, patience, and perspective, is what enables investors to navigate uncertainty and participate in recovery. This mindset has guided many of the most successful investors of our time. As Marks recently noted, today’s global trade conflicts have created a uniquely complex and unfamiliar environment—one in which even seasoned economists lack reliable models. Rather than reacting with fear, this is precisely when long-term investors must lean into the time-tested investment principles that have carried them through generations of change.
And yet, as investors, we do not need to predict—we need to prepare. As Benjamin Graham, author of Intelligent Investor, wrote, “Sound investment principles produce generally good results. We must act on the assumption that they will continue to do so.” That principle still holds. Our approach is rooted in the belief that thoughtful strategy, not perfect timing, drives long-term outcomes.
As Graham warned after the market contraction of 1969–70, investors should be prepared to endure periods of decline. Markets will not always deliver immediate recovery—but enduring the downside is often what earns the upside.
In complicated moments like this, we find perspective in the words of Mark Twain, “History doesn’t repeat itself, but it often rhymes.”
We are grateful for the trust you’ve placed in us, and hope you will be in touch with any questions you have.
Sincerely,
Janet Wills
Adam Mehrer
