Financial Insights

KCM On Balance – April 2022

The war in Ukraine dominated the news cycle and financial markets throughout March. As investors around the world reacted, the S&P 500 fell more than 10% from its high at the beginning of the year, officially entering a correction. One immediate effect from the fighting was a continued rise in gasoline prices, upsetting in the face of already rising inflation. After reaching its nadir on March 14, the S&P 500 saw steady gains throughout the last two weeks of the month, rising out of correction territory on March 29.

With inflation on the rise, the Fed raised the interest rate by a quarter of a percent on March 16, the first increase since December 2018. Further increases are expected at all six remaining Fed meetings this year, with a half percentage point increase anticipated in May. While the increases are necessary to combat inflation, consumers and businesses should expect higher borrowing costs. Inflation may combine with higher borrowing costs to slow economic growth, and weigh on stock valuations. However, even in the face of slowing growth, some market analysts believe that the bull market may not have completely run its course. Any progress in peace talks between Russia and Ukraine will likely have a positive impact on the market.

Articles of Interest

The Power of Diversification: Asset Class Returns

This chart looks at the relative up and down performance of 14 asset classes by ranking their annual performance. Year to year, the asset classes tend to move around the chart in no apparent pattern. For example, in 2020, US REITs were the worst performing asset class. In 2021, they were the best. This seemingly random performance illustrates the benefit of spreading your risk across many different asset classes, as illustrated by the 60/40 equity/fixed income blend. By diversifying across all these asset classes, investors have the opportunity to capture market returns – benefitting from the strength of the leading asset classes without being overexposed to those that are lagging.
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Understanding How Interest Rates Affect the Stock Market

Interest rates can influence nearly every part of your financial life. They also help determine the behavior of investors as well as consumers and companies. Of these groups, investors tend to be the most sensitive to news surrounding interest rates and their movements because of how it can affect different assets and what it signals for the market as a whole.
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7 Ways to Avoid Probate Without a Living Trust

There are good reasons people want their estates to avoid probate, and a lot of ways to do it. Probate can tie up the estate for months or longer and incur extra expenses. While some states and localities streamlined the process, at least for less valuable estates, often probate still has delays plus extra expenses and work for the estate administrator. Avoiding probate often is a major estate planning goal, and you can structure the estate so that all or most of it passes to your loved ones without probate.
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Stop Speeding, Get the Junk out of Your Trunk, And Other Strategies to Save Money at the Gas Pump

The invasion of Ukraine, which has led President Biden to ban the import of oil and natural gas from Russia, is contributing to the latest spike in gas prices. Even if you can afford to absorb the increase, paying $6 and some change for a gallon of gas can cause some psychological pain. Here are some strategies that can save you money — and other moves that may not reduce your costs as much as you think.
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These Are the 30 Most Beautiful Gardens in the World

Now that it’s spring, at least in the northern hemisphere, gardens are starting to bloom and fill with flowers. If you are looking for great gardens around the globe that you can visit, you will want to check out this list.
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S&P 500 Index represents the 500 leading U.S. companies, approximately 80% of the total U.S. market capitalization.

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