All That Matters: What Did We Learn?

Retail Investors End Selloffs

Mike: We all know the saying, “April showers bring May flowers.” That familiar rhyme feels especially fitting for what we’ve experienced in the stock market this spring. In April, we likened navigating a turbulent market to weathering a storm. But just like the seasons change, so too did the market. In the last few weeks, we’ve seen the stock market make a strong recovery, regaining all of April’s losses. Now that the flowers are seemingly blooming, we want to pause and reflect. As investors, it’s essential to look back on these challenging periods and ask ourselves: “What did we learn?”

Our first lesson is this: retail investors – everyday individual investors – play a key role in ending market selloffs. Retail investors contribute consistently through biweekly 401(k) contributions, savings plans, education funds, retirement accounts, and more. So, while institutional investors are driving volatility, the steady buying from everyday investors helps stabilize the market. This consistent buying, once the selling pressure subsides, is what ends selloffs and brings the market back to life. Even more, these retail investors are more educated than ever. With access to high-quality educational content like the Psychology of Money, Animal Spirits podcast with Michael Batnick and Ben Carlson, and hopefully our own series All That Matters, they’re making smarter, more confident decisions.  

Ross: Warren Buffett, one of the most successful investors in history, has spent over five decades teaching everyday people how to build wealth through the markets. One of his most enduring principles is the value of maintaining a long-term perspective — especially during market selloffs. After experiencing a volatile April, many retail investors put his advice into practice and stayed the course. When the market recovered quickly, those who bought the dip found themselves in a strong position. Of course, not every downturn will be followed by such a swift rebound. We may experience more volatility this year, but April reminded us that staying invested can lead to better outcomes over time.

Don’t Miss the Best Days

Ross: The second key lesson from April is that, historically, the stock market’s strongest days often occur in periods of heightened volatility. On April 9^th, I was in the middle of giving a client presentation on the potential impact of President Trump’s tariff agenda when the news broke that the administration was pausing the tariffs. The markets subsequently surged. If you weren’t invested that day, you likely missed out on a major opportunity, one that you may not be able to recapture. It’s tricky — the best days tend to happen when things feel the most uncertain.

Mike: In some ways, it’s unfortunate that some of the best days for an investor are going to occur when the market is weathering a storm. April 9^th ended up being the sixth best day in market history. A 9% return in a year is impressive — a 9% return in a single day is extraordinary. Don’t let fear and uncertainty push you to the sidelines, as missing just a few of these days can have a lasting impact on your long-term returns.

Behavior Determines Success

Mike: The third and final lesson is the one that truly matters: behavior is what determines your success. What you did during April’s selloff had everything to do with how you came out on the other side.  

It’s important to give yourself grace. It’s very difficult to navigate these market moments, but you have your Baird team to help you navigate the uncertainty. Behavior tends to be consistent over time and your past behavior is often indicative of what you will do in the future. If April was difficult for you, it might be time to reassess both your mindset and your portfolio. Ask yourself: What asset allocation would help me feel more secure during the next downturn? Don’t think it’s too late to change your behavior, either. Lean on your team and don’t give up on yourself. How you act determines everything.

Ross: The stock market can be a powerful tool for building wealth, but that’s only if you can stomach the roller coaster ride. If your portfolio is heavily weighted in stocks and that makes you uneasy, or you’re at a stage in life where you want less risk, diversifying with bonds, cash, or other assets can help ease the pain. What’s particularly unique about this moment is that the market recovered so quickly, giving you the rare chance to re-diversify without locking in losses, whereas after the 2008 crash, it took the market nearly six years to reach a new all-time high. Warren Buffett, who recently announced his retirement from Berkshire Hathaway at 94 years old, once said “The most important quality is temperament, not intellect.” This wisdom rings true for every investor.

Lessons from Warren Buffett

Mike: There’s a lot we can learn from Warren Buffett’s extraordinary success. Since 1964, Buffett compounded his investments by 5.3 million percent total. In comparison, the S&P 500 returned about 36,000% in that same time frame. To put that in perspective, that means Buffett turned $100 into $5.3 million, while the S&P 500 grew it to $36,000.

So, what exactly is the lesson? Warren Buffett bought good companies and held them with the belief that things would get gradually better over time. He placed his trust in the American economy and the resilience of its people. Buffett characterized April’s market volatility as "really nothing" compared to historical downturns he’s experienced throughout his career like the Cuban Missile Crisis, the Dot-Com Bubble, and the 9/11 attacks.

If there’s one lesson to take from arguably the most successful investor of all time, it’s this: maintaining a calm, optimistic, long-term perspective is the best way to grow and compound your wealth. And that mindset is tested most during turbulent times.  

Ross: Buffett once said, “If past history was all that was needed to play the game of money, the richest people would be librarians.” He also understood that success isn’t just about knowledge, it’s about temperament. Staying invested in quality companies, keeping your cool, and riding out the waves is what makes the difference. His 5.3 million percent return came from compounding at just 19% annually compared to the S&P 500’s average of 10%. The power of compounding is remarkable. There’s so much we can learn from his career, and times like April 2025 are the perfect opportunities to put his methods into practice.

Mike: Investing is a journey, and there will be difficult moments. Your Baird Financial Advisor team is here to help you navigate them. We can’t predict the future— the next selloff could last even longer—but we can prepare. By applying what we’ve learned, building a strong financial plan, and sharing wisdom along the way, we can weather these storms, because eventually they do bring flowers.