What they said, what they bought, when they sold, how they did it.

“They” could be a friend, a neighbor, a co-worker, or a buddy at the club. Whoever they are, they can be one of the biggest obstacles to success for financial advisors and their clients.

“They are doing better than me”

“They are sitting in cash while the market sells off”

“They are making so much money in sectors I’m not in”

If you hear about a financial win while you’re struggling, it’s going to drive you crazy.

Never mind the fact that you have no idea what that person’s goals are, or what their risk tolerance is, or how many losses they have.

If any of this sounds familiar, you’re dealing with the absolute worst of the deadly sins, envy. It can infect anyone from time to time, even the wisest people.

Let me push back against whoever “they” are in your life by dispelling a few notions.

  1. They won’t always make the right call. Say that person did go to cash at the start of 2022…was it luck? Have they been in and out of stocks the past decade trying to avoid scary headlines and missing out on huge returns?
  2. They don’t have a magic bullet.They aren’t running some magic system no one knows about. They haven’t cracked the secrets to outperforming that 160,000 CFAs and 22,000 hedge funds mysteriously haven’t discovered yet.
  3. They probably aren’t telling you about their losses. You probably won’t hear about the time they bought XYZ and it went down 50%. When’s the last time you heard “I’m making so much money but let’s talk about my losses too!” I’ll wait.
  4. They can’t avoid all losses and neither can you. If you told your advisor to sell every time the market drops 5%, you’d be selling—on average—3 times a year.  If you told them to sell every time the market drops 10%, you’d basically be doing it every single year. Warren Buffet, Mike Antonelli, and Peter Lynch all lost money while investing (can you believe I put myself in there?).
  5. They aren’t you and you aren’t them. Who you are as an investor has been shaped by your journey. The way you view risk and reward, the way you view politics and markets, the kind of investments you are willing to put your hard-earned money into, what allows you to sleep at night. All of that is unique to you and the life lessons that have brought you this far. It will NEVER match up to those around you. 

Now I’m not saying that friends and family can’t have great advice, or that what they are doing couldn’t help you out at times. If “they” are doing well be happy for them, karma smiles on those who celebrate the success of others.

But before you make a change, I implore you to talk it through with someone (your advisor is the prime candidate). Don’t abandon your plan because of a surface-level conversation that’s not even about you.

We all just went through a horrible year where most investors lost money. Allow yourself some grace. Maybe you bought a stock and it went down, maybe you bought the dip and stocks continued to fall, maybe you thought you could handle more risk and found out you couldn’t.

None of that makes what “they” are doing the answer for you. The answer is learning to cope with setbacks as they arise and to not let them overwhelm you, for therein lies the wisdom of the ages.

When it comes to your money focus on what’s right for YOU and continue marching down the path of life with your head held high, for one day soon the winds of fortune will once again fill your sails.

Now What

Let me be the first to say, THANK GOD 2022 is over. That was a painful 365 days to be an investor. 2022 will go down as the 7th worst year since the 1920s for the stock market, and the 3rd worst year for a 60/40 portfolio ever (only eclipsed by the Great Depression). Inflation was high, the Fed actively tried to slow the economy, and formerly high-flying Tech stocks came down to Earth (are we going to do this every few decades?). 

Let’s focus on the question that really matters: Now what? Where do we go from here and will 2023 be kinder to us? 

First, let’s lean into a few evidence-based insights: 

-        Back-to-back negative years are super rare. From 1928 to 2021, it’s only happened to the stock market 8 times (and 5 of those were pre-WW2).

-        Stocks and bonds have NEVER both been down for two consecutive years. (Both were down last year, which was itself a rarity.)

-        Since the end of WW2, the stock market has never posted a negative return for the 12-month period following a midterm election (hat tip to my friends at Strategas)

So a few things are in our favor when we look back at historical statistics—but again, no one knows the future. 2000 was a terrible year for the markets, and then the next year the U.S. was hit with a terrorist attack that deepened and lengthened that downturn.We can hope 2023 doesn’t hold anything that horrific in store, but there will always be variables that no one can foresee. Instead of handwringing about that, let’s focus on these 5 things:   

  1. Emphasize what’s in your control – None of what you see on TV, or what the market does every day, is in your control. If 2022 left you feeling helpless, don’t let 2023 do it to you too. Focus on your savings and spending exclusively, and—trust me on this—WATCH LESS NEWS. 
  2. Survive the day to day – “Think long-term” is something you hear all the time, and while it’s absolutely the right advice, you won’t reap the benefits of long-term growth if you can’t survive the day to day. If 2023 is another bad year, are you equipped financially to survive without selling any investments? 
  3. Learn from the past, but don’t live there emotionally – Everyone hates to lose money but try not to dwell on it. Instead, learn from how it made you feel. Write down how you felt and what decisions you made. With the benefit of hindsight, which actions would you repeat in 2023 and which would you avoid?
  4. Play your own game – Try not to get caught up on what your neighbor or your friend at the club is doing. Charlie Munger said, “the world is not driven by Greed, it’s driven by Envy.” Don’t get caught chasing fads and stocks you don’t understand because some random person said they made a bunch of money on tech options. Don’t let envy consume you. 
  5. Live – This is what I most want you to take away. No matter what happens in the world or in the stock market, no matter what your statement balance is or how far you are from your high-water mark, you must live. 

2022 was rough and we know 2023 won’t be perfect either. No life is perfect, no portfolio is perfect, no plan is perfect. If you wait for the right moment to be happy, if you obsess over a number, you will miss what’s so special about being here. 

Look up at the stars, laugh with a friend, lock eyes with someone you love. Help a colleague in need, dream big, dance, drive until the scenery changes.

My plea to you, as we take another trip around the sun, is don’t forget to live. 



Bull and Baird is not meant to be a complete analysis of every material fact regarding any company, industry or security, does not take into account the financial objectives of particular client and should not be relied upon as the basis for any investment decision. The opinions expressed here reflect the author’s judgment at the date of publication and is subject to change. The information has been obtained from sources considered to be reliable, but it is not guaranteed to be accurate. Past performance is not a guarantee of future results. For investment advice specific to your situation, or for additional information, please contact your Baird Financial Advisor.

Lessons From 2022

As this year winds down and we look forward to sharing holidays with family and friends, I thought it would be a good idea to look back on a chaotic 2022 and ask, “What are the lessons I need to learn?”   

In the spirit of a Top 10 list—because who doesn’t love a Top 10 list—here is what I came up with (with a little help from two friends): 

1)    Bear markets happen: I’m 48 years old and this is the seventh bear market in my adult life. They happen, a lot. In fact, you can pretty much expect two bear markets every decade for the rest of your life. You have to survive them to reap the benefits of bull markets. 

2)    Setbacks are the result of those bear markets: There is no strategy, or level of sophistication, that will guarantee you will never experience a setback while investing. Avoiding drawdowns while investing in the stock market is just short of impossible. What matters is how you deal with setbacks when they arrive. 

3)    Cash is the oxygen of freedom” – Morgan Housel: Investors who are sleeping well this year had a pile of cash they could point to and say: “That’s going to get me through this bear market.” Even if stocks are going straight up you need to maintain a cash reserve—and it should be untouchable. Why? Because of #4.   

4)    Things change quickly, way quicker than we think: For the better part of a decade we had zero rates and low inflation. That changed instantly in 2022 and the vast majority of people were caught off guard and struggled to understand why it was happening. 2021 was one of the best years ever to be an investor, 2022 is one of the worst. It happened that fast. 

5)    Bonds and stocks can go down at the same time: For decades the place to hide out when stocks fell was in bonds. It was very rare for them to lose money in the same year. In 2022 they both went down together. Just because something RARELY happens doesn’t mean it CAN’T happen. Like me working out. 

6)    When money is free, people do stupid things with it and that leads to instability: In retrospect, the next time I see someone paying $1 million for a picture of a rock on the internet, it might be time to get more defensive. There was just too much money sloshing around the system last year while rates were at zero. 

7)    The US Federal Reserve trumps all: There’s a reason they say, “Don’t fight the Fed.” If the Fed wants to slow the economy to reduce inflation, you don’t want to stand in front of them. Alternatively, when they are easing it’s a breezy tailwind. 

8)    Stocks aren’t the only investing vehicle: “There’s no yield for my cash” was something we heard for years; zero rates punished savers and basically forced them into stocks (TINA). Now, after the Fed did all that hiking, there are more attractive opportunities in bonds. Are you taking advantage of everything available to you outside of just stocks? 

9)   “Time horizon is everything”Ross Mayfield: It defines one’s risk tolerance, needs, and perspective. For a younger investor, a bear market might be celebrated—stocks on sale! A better entry point for long-term investing! For a retiree in the drawdown stage, it means something entirely different. Every single discussion about investing should start with two questions: “How long do I want to invest this money for?” and “What is the purpose of this money?” 

10)   Because we’re human, this will never be easy: The second-best bull market of all time ended in 2022; it was an incredible decade to grow and compound wealth. Yet investors are miserable because a bad 10 months feels worse than a good 10 years. That’s why this is all so hard: greed and fear are timeless. “The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” -Seth Klarman 

Bonus lessons learned: Star Wars can have a good TV show (Andor). NY Football teams can win games. Being a good public speaker isn’t easy. In N Out burger is overrated. TX BBQ is as good as they say. Crypto needs way more regulation to survive. Walking 30 minutes a day is one of the best things you could ever do for your body and mind.

Survive and Thrive

For all recorded history, humans have been asked to do two things that are often at odds—Survive and Thrive. 

Survival, on a day-to-day basis, is required for a species to avoid extinction. When danger presents itself, we must overcome it or face oblivion. 

But if we ignore thriving, we cannot grow and flourish as a species. We must do both at once — even when we’re struggling.

It’s the same for investing. 

We are in a bear market right now and bear markets are painful. They last, on average, about 330 days. They fall, on average, about 32% from their peaks. They return to their starting point, on average, in about 1.7 years. Those are averages; bear markets can be better or worse, but you must survive them. 

Why is this one so bad? Because of the US Federal Reserve and their fight against inflation. Ben Carlson of RWM said:  

“They want the stock market to go down. They want people to lose their jobs and make less money. They will take the economy down if they have to so prices will stop rising.” 

If the most powerful entity in the financial world wants the stock market to go down (to crush inflation) they are going to make it go down

How do you SURVIVE a bear market? Here are 3 things to focus on: 

  1. Cash. Are you cash needs met?  Do you have a sufficient pile to cover your bills that are due without having to touch long term assets?  My friend Morgan Housel says “cash is the oxygen of freedom,” and it’s one of the only things I know that helps investors sleep better at night. 
  2. Plan. Is your plan updated for current market conditions?  Have you simulated what a bad bear market would do to you and your goals?  If not do it, so you know what a worst-case scenario does to your financial life.  If you don’t have a plan, get one. 
  3. Behavior. Focus on your game and your behavior then ask yourself, how did I act the last time the market fell apart?  Are there any regrets you have from 2020, 2018, 2011, 2009, or 2000 about how you navigated those bear markets?   

There are certainly more ways to survive a bear market but I want to turn our attention to how we can THRIVE in a bear market. Here are a few thoughts: 

  1. Look for opportunity. For the longest time there was no yield to be found for investors; now it’s everywhere. A 2yr Treasury note yields 4.3% (as of this writing). TINA (there is no alternative **to stocks**) is dead. When this is over, and it will be one day, did you take advantage of every investment opportunity available to you? 
  2. Remember your purpose. Why did you invest in the first place? What was the purpose of this money? Bear markets come and go; there have been 11 in my lifetime, but they don’t change the purpose of why I’m here and why I’ve invested. 
  3. Live. Look, I get it. Stocks are down, bonds are down, prices are high, and uncertainty abounds. But you must live. Tend to family, see friends, go on the occasional vacation, spend time with your spouse. Find beauty in the world. At the end, the only thing anyone wants is more time. Don’t waste it.  

The challenges we face in life make us who we are. They define our existence and surround us every day. Surviving and thriving are two sides of the same coin.   

The worst thing you can do is assume bad times will continue indefinitely—just like it’s dangerous to assume good times will last forever. Booms plant the seeds of busts like the one we’re in now… but busts also plant the seeds of booms.   

We will get through this challenge, like we’ve come through every other challenge we’ve faced. If you focus solely on surviving at the cost of thriving, you will be harming someone you hold dear:  your future self. 



All investing carries risk and past performance is no guarantee of future results

Was That The Bottom?

As I write this blog, the S&P 500 sits about 12% below the all-time high it made in January. In June of this year it was down 23%—one of the worst starts in history—but since then it has bounced significantly. Which raises the question: Was that the low in June?

I’m teaming up with my friend Ashby from Money Visuals (check him out on Twitter @MVMoneyVisuals) to ponder this topic. Ashby puts complex investing topics into easy-to-understand images, so you can see why we became fast friends.

The issue with calling “bottom” is that it’s only knowable in the future. 

There are indicators people look at to try and make this call (breadth thrusts, sentiment, positioning) but none of them have a perfect track record.

When the low was made in March 2009 (Great Financial Crisis) and March 2020 (Covid Crash), no one believed the worst was over. Why? Because headlines were still horrific.  In 2009 it seemed like the entire financial system was coming apart and in 2020 a disease we barely understood was just getting going. I mean, of course no one believed the market bottomed (even though it had). Why would they?

Here’s the thing with bottoms: they don’t happen when the news is bright and cheery; they happen when headlines are still scary. In June 2022 we were worried about spiraling inflation, endless Fed rate hikes, and the potential for an awful recession. People were dumping stocks and bonds while contemplating further downside.

Yet we are up over 10% from there….why? Well, things weren’t as bad as we feared (and had priced). Our economy is still adding jobs, corporate earnings didn’t drop as much as we expected, oil and gas prices have fallen, and “motivated” sellers have dried up.

So, was that the bottom? I think it was, UNLESS the US economy falls off a cliff. The worst bear markets (think -30% or more) lie with the worst recessions, so if you don’t think that was the low, you need dreadful things to start happening in order to be right.

Does that mean I think we race back to the highs set in January? No, I don’t think we do. You can be bullish without expecting a rip higher. It’s possible we spend years going sideways.

How should you invest from here? I think this chart sums up my thoughts nicely:

I’d rather be too early than too late. Warren Buffett famously bought stocks in the fall of 2008, way before the market bottomed in March 2009. Do you think he cares today that he bought great companies at good prices before the actual low was in? I bet he doesn’t.

Another thing to remember is that if you’re working with an advisor, they plan for all of this. That’s the whole point.

Selloffs are inevitable and there is NO strategy that will guarantee every year is a successful one. The world is just too complex, and the markets move too fast to say to someone “you’ll never be worried along the way.”

Finally, it’s never going to seem like a good time to buy. If you find yourself saying all of the things in quotes on Ashby’s chart, then it’s going to be super hard to succeed at investing.

Remember, it’s not you versus the market—it’s you versus yourself. Pessimism about the future is seductive; it always seems like the right mindset. Don’t fall into the trap of thinking that just because things are bad, that means they will get endlessly worse.

As you contemplate how to proceed from this moment, consider this framing provided by the WSJ’s Jason Zweig—one of the best to ever write about investing.

“When you buy or sell stocks based on short-term market turmoil, the person you are trading with is your future self. Remember: In every trade, there has to be a winner and a loser. So who is getting the better deal?”

In reality, you have to be a rational optimist: Know that the world (and markets) are a scary place, but don’t let fear stop you from benefiting in the long-term growth of this nation and its stock market.