In the Markets Now: What I'm Thankful For

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Things I Am Thankful for (in the Markets)

1. Bull markets. With U.S. stocks now in year 4 of a cyclical bull market and year 12-16 of a secular bull market (and with only three negative years in the last 20) it can be easy to take stock market gains for granted. We shouldn’t. While U.S. stocks have delivered an astonishing 15% annually over the last decade, their longer-term average return is closer to 9-10% annually. And while the post-2008 bull market has been relentless, it’s worth noting that two of the last five decades have actually seen negative inflation-adjusted returns (-13% in the 1970s and -29% in the 2000s). Investing in stocks is a bet that the profit-motive inherent to capitalism leads to earnings and share price growth over time. That has been a very successful bet, and I expect it will continue. But just as trees do not grow to the sky, stock prices aren’t guaranteed to go upward into perpetuity. Those aiming to build long-term wealth cannot afford to be on the sidelines during bull market runs.
   
   
2. Improvement. In 1900, the average life expectancy for a citizen of Earth was 32 years. By 2023, it was 73 years. “This extraordinary rise is the result of a wide range of advances in health—in nutrition, clean water, sanitation, neonatal healthcare, antibiotics, vaccines, and other technologies and public health efforts—and improvements in living standards, economic growth, and poverty reduction.” As investors, we often think of innovation in terms of new products and profit growth, but the benefits of constant improvement and invention accrue to a much wider audience than just stockholders. It is certainly easy to find fault with the modern financial system, but the economic growth and technological innovation it has helped foster over the last century (paired with old fashioned human grit) has done some pretty amazing things, too.
   
   
3. U.S. energy independence. This theme is messier in practice than in theory since global markets still set energy prices, but the U.S. is in an enviable position when it comes to energy production—an increasingly important idea in the age of power-hungry artificial intelligence. You might know that the U.S. is the world’s leading producer of natural gas (as well as crude oil, nuclear power, and geothermal electricity), but did you know that three individual U.S. regions actually produce more natural gas than most countries? This is a major advantage in a time of both increasing power needs (data center electricity demand is expected to more than double by 2030) and elevated geopolitical tensions (in 2024, U.S. crude oil imports from countries in the Persian Gulf were at the lowest level in nearly 40 years). The power renaissance is here.
   
   
4. Crises. While a perfect world would feature no crises (financial or otherwise), that world doesn’t exist, and there are some lessons that can only be learned in times of adversity. The Great Depression—one of the more devastating economic downturns in modern history—highlighted the inadequacy of existing welfare systems and investor protection laws, and catalyzed the creation of Social Security, unemployment insurance, and the FDIC, among other things. More recently, the Covid-19 pandemic both laid bare the fragility of the many critical supply chains and created a framework for successful public-private crisis-response partnerships with Operation Warp Speed. I’ll never root for a crisis, as financial downturns result in all sorts of malady. But if periods of stability inevitably lead to instability, then we must take the lessons from each setback and use them to build more resilient, responsive, and dynamic systems for the future.
   
   
5. Investing, democratized. Over the last century, U.S. large-cap stocks have returned ~10.5% a year, turning a set-and-forget $100 investment into $2.1 million. It is not hyperbole to say that the stock market is one of the great wealth creators in modern history. And yet, until recently, very few participated. In The Great Crash 1929, John Galbraith writes that in the late 1920s, “only one and a half million people, out of a population of approximately 120 million had an active association of any sort with the stock market…to the great majority, the stock market was a remote and vaguely ominous thing.” Today, the percentage of Americans who own stocks is over 60%. Further, a myriad of new technologies and academic studies across the last century have compressed the costs of investing, made accessible new asset classes, and enabled more robust portfolio construction. Investors are better positioned for success today than ever before, and for that I am thankful.

Disclosures

This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. 

This report does not provide recipients with information or advice that is sufficient on which to base an investment decision.  This report does not take into account the specific investment objectives, financial situation, or need of any particular client and may not be suitable for all types of investors. Recipients should not consider the contents of this report as a single factor in making an investment decision. Additional fundamental and other analyses would be required to make an investment decision about any individual security identified in this report.

For investment advice specific to your situation, or for additional information, please contact your Baird Financial Advisor and/or your tax or legal advisor.

Fixed income yield and equity multiples do not correlate and while they can be used as a general comparison, the investments carry material differences in how they are structured and how they are valued. Both carry unique risks that the other may not.

Past performance is not indicative of future results and diversification does not ensure a profit or protect against loss. All investments carry some level of risk, including loss of principal. An investment cannot be made directly in an index.

Copyright 2025 Robert W. Baird & Co. Incorporated.

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