All That Matters: 2025 Unwrapped

Looking Back at the Year

Mike: Welcome to All That Matters with Mike and Ross. It’s December, and as the year winds down, it’s time for recaps and wrap ups. We’re doing things a little differently – Ross and I sent each other two gifts to celebrate the holidays and remind us of everything we learned this year. The stock market’s up about 16.5% as we record this, marking the third straight year of positive returns. But what a ride: at one point, we were down almost 20%. One of the biggest comebacks in history.

Ross: Yeah, it’s been wild. The bear market in April was one of the steepest since COVID, but the recovery has been incredible – one of the best six-month runs in the last century. If you’d asked me a few months ago, this conversation would’ve sounded very different. But here we are, looking back at another year of double-digit gains.

Gift Exchange

Mike: Alright, I’ve got my Griswold Family Truckster ugly sweater on and I’m feeling the holiday spirit. Ross, you’re up first. I sent you something I know you’ll appreciate.

Ross: Okay, let’s see… bubbles! We get asked about bubbles all the time. Is AI a bubble? It’s the question of the year. We started the year talking about bull markets and here’s what we’ve said: Bull markets tend to last longer than people expect. We don’t know how long this one will last but it’s still relatively short and weak in magnitude by historical standards, which suggests plenty of room to run next year as it moves toward long-term averages. And importantly, the market is driven by earnings and companies continue to post great results. The market isn’t perfect; it can be narrow and concentrated at times. But this bull market is still relatively young and supported by strong fundamentals. I understand the comparisons to the late 90s given the pace of new technology, but I still don’t believe we are in bubble territory.

Mike: Exactly. If it’s a bubble, it’s a bubble where companies are making a ton of money. Companies like Walmart and Goldman Sachs are at all-time highs, not just tech companies. Don’t get caught up in the bubble speculation. Our advice is to focus on sticking to your plan and riding the bull market and leave the second-guessing to other people.

Mike: My turn to open a gift. A golf ball! Ross, you know I’m not the biggest golf fan – what’s this one about?

Ross: You may not be the biggest golf fan, but you wrote one of the greatest golf blogs of all time – The Wisdom of Golf.  You invited readers to come shank balls into Lake Michigan with you, so I figured you needed more balls. Tell us what that one was about.

Mike: I love drawing parallels between golf and investing. The lessons you learn on the course are so applicable to life and investing – patience, discipline, and knowing what shots to take. I always say my favorite part is the 19th hole – sharing the highs and lows with friends, just like in life and investing. We all experience ups and downs, just like the market, but savoring the journey is what I think it’s all about. Ross, I’m pretty sure this ball is headed straight for Lake Michigan.

Ross: Next up, an envelope – always intriguing. Mike, you shouldn’t have. Credit cards! What’s the story?

Mike: I sent you credit cards because we talk about the national debt all the time. Why do we talk about it so much? Is it like a credit card? Honestly, it’s the perfect analogy.  

Ross: I don’t think these cards have a $30 trillion limit, but the national debt is a market boogeyman that gets brought up to stoke fear and anxiety. Investors have worried about it for hundreds of years. But if you’d let the national debt keep you out of the market over the last 50, 70, 100 years, you’d have missed out. It’s not something we ignore – we factor it into our analysis of markets and the global economy – but it should be way down the list of investor worries. Especially as we enter year four of this bull market, it’s clear the national debt hasn’t stopped major companies from delivering strong profits.

Mike: In my previous role, I spent years meeting with sophisticated investors and money managers, and not once did the national debt come up. Their focus was on what truly drives markets: interest rates, earnings, the economy, and housing. That’s why our advice is simple: keep your attention on your financial plan and long-term goals, not the headlines.

Mike: Last gift – an umbrella. Ross, what’s the story?

Ross: It’s a nod to your blog – When Uncertainty Rains. Right as the market was melting down in April, major storms hit the Midwest – including your own house, Mike. That situation reinforced that sometimes you just have to weather the storm. What were your other takeaways?

Mike: While we were expecting those tariff announcements in April, I don’t think anyone anticipated the scale. And when I was driving home during that horrible storm, I realized what I was experiencing was similar to what we were experiencing in the markets. That moment inspired me. In both cases, the best move was to sit tight and not act out of fear. That’s often when mistakes happen and we make the wrong decision.

Ross: We know the storms will come, but your umbrella is your plan, along with your Baird Financial Advisor team, and as an extension, Mike and I. It’s what keeps you covered, so you can stay focused on brighter skies ahead.

Predictions for 2026

Ross: Before we wrap, let’s make some predictions. Mike, you first.

Mike: It looks like we’re about to close out three years in a row of double-digit returns – so how often does four happen? Turns out, it’s common. We call them bull markets. I think the pieces are in place for 2026 to be another good year: a strong consumer, solid earnings, maybe some Fed action. I could be wrong, but I think history’s on our side. What’s your prediction, Ross?

Ross: I think we’ll see a meaningful pushback against AI data centers in terms of resource use and electricity inflation, especially given that 2026 is an election year. The government will be in a tricky spot trying to balance consumer price inflation with keeping up with our adversaries in the AI race. It’ll be a big theme in 2026, but I agree with you that it’ll be a good year in the market.

Mike: Thanks for joining us for our year-end gift exchange and recap. 2025 had its ups and downs, and 2026 will be no different. Ross and I will be here, in addition to your Baird Financial Advisor team, to help you tackle all of the surprises and challenges along the way. We wish you a joyful holiday season and a happy new year.