KW Wealth Management May 2026 Newsletter
- Kimmy Wan
- May 5
- 7 min read
By Kimmy Wan
Table of Contents
Key Updates — The Economy & KW’s Opinion — Why We Took Some Profits
AI in Investing — Helpful Tool & KW’s Opinion — How We Use It
Netflix — Strong Business, Weak Stock & KW’s Opinion — Build, Don’t Chase
Apple — Cash Machine, New Chapter & KW’s Opinion — Long-Term Strategy
Market Expectations — What’s Priced In & KW’s Opinion — Stable for Now
Planning Check — Medicare Costs & KW’s Opinion — Why Overpaying Happens
Education — Phone Security Checklist
Key Updates:
The economy feels split. Some areas are still moving, others areas are flat or slowing. The gap is getting more obvious. For example, AI and Energy are moving but Housing and Small busines are not.
Consumers are being more careful. Lower-income households are pulling back the most. Higher-income spending is still there, but more selective.
Manufacturing is okay, but mostly in AI, data centers and energy. Not broad strength across the board.
Jobs look stable on the surface, but hiring has slowed. Big companies are quietly cutting costs and laying off more workers
Inflation is still sticky. Around low-to-mid 3%, with energy pushing it up recently. Core is lower, but real-life costs, such as insurance, housing are still high.
Tariffs don’t go away. Companies pay them, then either raise prices or take the hit on margins. It ends up in the system either way.
Mortgage rates are still around mid-6%. That’s enough to keep housing stuck. Most buyers can’t afford, sellers don’t want to move.
Oil is up due to geopolitical tension, especially in the Middle East. High gas prices flow through everything including transportation, goods, daily costs.
Higher oil and defense spending are helping keep growth numbers up, but it’s not broad. It’s in very specific areas carrying it.
Energy and defense are leading. Real estate is struggling with rates. Retail spending is softer. Tech is mixed, even with the AI story.
KW's Opinion:
The economy is holding up, but it’s uneven. Growth is coming from a few areas, not everywhere. Inflation and rates are still driving most of what we’re seeing. Therefore, we have taken some profits following the recent run-up, in my opinion, as part of ongoing portfolio monitoring and risk management.
AI in Investing
AI can help make things faster and cleaner in financial firms. It can handle routine tasks, speed up responses, and cut down on simple errors. Clients get quicker access to information, more consistent execution, and over time, possibly lower costs.
AI is also useful for monitoring portfolios. For example, in a fund like Vanguard 500 Index Fund, AI can quickly scan holdings, track sector shifts, flag concentration risk, or show how changes in rates or energy prices might impact the portfolio. That kind of speed helps with ongoing oversight.
That said, AI has limits. It doesn’t understand personal situations, emotions, or real-life decisions. It also depends on how firms use it. Some may use it to improve service, others may use it to optimize their own profitability. Data privacy is another concern, and models don’t always react well in unusual market conditions.
KW's Opinion:
At the end of the day, AI is the Assistant, Not the Advisor . It can make things faster and cleaner, but it doesn’t replace judgment, experience, or trust. The right approach is to use it to support the work, while keeping real decisions focused on the client’s long-term goals.
Netflix
Netflix is a global player in streaming—TV, movies, even some gaming now. Fundamentals are solid. Balance sheet is in good shape, profitability is strong. P/E around 29x, not stretched vs peers. Earnings grew over 40% last year, and growth is expected to continue, just at a more normal pace. Revenue still growing close to 10% a year. Margins and return on equity are strong. Debt is manageable, and cash flow is healthy. That said, the stock hasn’t followed the fundamentals. It actually dropped after strong earnings and is down recently. The stock has also lagged the broader market recently, which tells you there are some near-term concerns.
KW's Opinion:
So, everyone’s still watching Netflix… just not buying the stock right now. Here is my opinion. This isn’t a quick trade. It’s a long-term story. When a strong business doesn’t move with the market, that gap can be an opportunity. I’m comfortable adding on weakness—this is something you build over time, not chase. Look! Netflix walked away from a big acquisition, choosing discipline over overpaying. I like that.
Apple
Apple Inc. is still one of the most dominant platforms in the world. Massive scale (~$435B revenue, ~$117B earnings), strong margins (~27%), and very high returns on equity. It’s a cash machine.
Growth is slowing—about 22% last year, expected closer to 7–8% going forward. That’s normal for a company this size. It’s no longer a hyper-growth name, but it’s still very steady.
Balance sheet is solid. They carry more leverage than before, but cash flow easily supports it. Nothing concerning there.
Now here’s the interesting part—leadership. Berkshire Hathaway, one of Apple’s largest shareholders, just went through its own CEO transition announcement recently at the same time, Apple is lining up its next move—John Ternus (hardware lead behind iPhone, Mac, Apple Silicon) is expected to eventually step in after Tim Cook. That’s not a random pick. That’s Apple quietly saying, “Hey… maybe it’s time to get back to building cool stuff again." If that shift happens, especially with AI and next-gen devices, it could matter more than people think.
KW's Opinion:
Everyone’s watching to see what the next era looks like. This isn’t a high-growth story anymore but it’s a long-term compounder entering a new chapter. The market is treating it like a mature business, which is fair. But a shift back toward product and innovation could reset expectations quietly.
I’m not chasing it here. I’m comfortable building over time, taking profit for my client with high concentration—this is the kind of name you add on weakness, not trade back and forth.
What the Market Is Expecting Right Now
Market expectations from Interactive Brokers ForecastTrader are pretty balanced right now. No clear lean on control of the U.S. House, which points to a likely divided government and fewer major policy changes. The economic outlook is also middle-of-the-road—no recession being priced in, but no strong acceleration either. Markets are still expecting gradual upside, with the S&P 500 leaning constructive into next year.
What stands out is the lack of strong conviction—everything is clustered in the middle. That usually means the market is comfortable, but also not positioned for surprises. When expectations are this balanced, any shift in inflation, rates, or geopolitics can move markets more quickly. For now, it supports staying steady, but also staying prepared.
KW's Opinion
Part of the recent strength makes sense, war-related spending has increased government spending, and GDP has picked up closer to ~1.5% recently. That helps explain why the market has held up. But that kind of support can be temporary. If inflation picks back up from oil, if rates stay higher for longer, or if the geopolitical situation escalates, markets can react quickly because that risk isn’t fully priced in. For now, it supports staying steady—but also staying ready.
I say the market looks stable for now, but don’t get too comfortable.
Planning Check: Are You Paying Too Much for Medicare?
I recommend reviewing your Income-Related Monthly Adjustment Amount (IRMAA) bracket, as Medicare premiums are determined by your income from two years ago. You may currently be overpaying if your income has recently decreased due to retirement or the sale of a business, yet Medicare is still billing you based on a higher-income year.
To determine if you are affected, please review your monthly premiums. The base Part B premium typically ranges from $170–$180 per month. If your premium is significantly higher (ranging from $240 to over $500), you are likely in an IRMAA bracket. You can verify this by checking your Social Security letter for the "Income-Related Monthly Adjustment Amount (IRMAA)" section. This will specify the income year used and your current bracket.
KW"s Opinion
A lot of the time, people aren’t overpaying on purpose, it just kind of happens. You retire, but Medicare is still looking at your “working years” income. Or, you had a one-time spike such as selling a house, stocks, or a Roth conversion, and now Medicare thinks that is your your typical year.
And the big one… filing status change. Becoming a widow or widower can quietly push you into a higher bracket without you realizing it.
Education: Phone Security Checklist
We’ve had a few clients recently ask about phone security, so I wanted to share a simple checklist. With so much personal and financial information on our phones, it’s worth taking a quick look if anything feels off.
If you think your phone might be compromised, start here:
Watch for warning signs — fast battery drain, slow performance, overheating, or unfamiliar apps/messages.
Review your apps — delete anything you don’t recognize or didn’t intentionally download.
Update your phone — install the latest software to close security gaps.
Run a security scan — use a trusted mobile security app.
Change passwords — email, banking, social media; turn on two-factor authentication.
Check your accounts — look for unusual logins or transactions.
Don’t open unknown links — delete suspicious texts or emails.
If issues continue — back up your data and do a factory reset.
Going forward — only download from trusted sources and keep your phone updated.
Most issues are manageable if caught early. When in doubt, it’s better to act sooner rather than later.
Disclosure
This material is provided for informational and educational purposes only and does not constitute investment, tax, or legal advice. The views expressed herein are those of the author as of the date of publication and are subject to change without notice.
This content is not intended as a recommendation, offer, or solicitation to buy or sell any securities or to adopt any investment strategy. Any references to specific securities, market indices, or investment strategies are for illustrative purposes only and may not be representative of any client account.
Past performance is not indicative of future results. All investments involve risk, including the possible loss of principal. Individual client circumstances vary, and readers should consult their own financial, tax, or legal advisors before making any investment decisions.
Advisory services are offered through KW Wealth Management LLC, a registered investment adviser. Registration does not imply a certain level of skill or training. For additional information about our firm, including fees and services, please refer to our Form ADV.
Copyright
2026 **KW Wealth Management LLC. All rights reserved. No part of this publication may be reproduced or distributed without prior written permission.
Comments