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Should We Go Into Protect Mode or Not?

  • This week we’re talking about what could go wrong in the markets and how it could impact your portfolio. 
  • Right now, we are still in investment mode, but we are getting close to the point where we may need to move into protect mode. 
  • There were already concerns building in the economy before recent geopolitical events. 
  • Growth was beginning to slow and inflation concerns were already present. 
  • Now, with geopolitical risks layered on top, the situation has become more complex. 
  • A key concern is the Strait of Hormuz and the potential for disruption to global oil supply. 
  • If that supply is significantly impacted, it could lead to a major spike in oil prices. 
  • A sustained disruption could trigger a global recession or worse. 
  • Historically, similar situations like the 1973–1974 oil crisis led to prolonged market declines. 
  • Markets often initially try to “look through” these risks, assuming things will resolve quickly. 
  • But if that optimism fades, investor sentiment can shift rapidly from confidence to panic. 
  • That shift is when markets can experience significant downward pressure. 
  • Our strategy is designed to remove emotion from these decisions. 
  • We follow a disciplined process rather than reacting to headlines. 
  • The first step is recognizing when the market reaches our sell signal and moving from invest mode into protect mode. 
  • Once that happens, we use our four sanity checks to determine how much of the portfolio to protect. 
  • These checks look at different parts of the economy and help us assess how serious the situation may be. 
  • Currently, two of the four sanity checks are already flashing red. 
  • Importantly, those signals were present even before geopolitical events escalated. 
  • That tells us the risks are not just event-driven, but also rooted in underlying economic conditions. 
  • If conditions worsen after an initial move to protect mode, we have a “safety net” that allows us to increase protection further. 
  • This ensures we are not caught off guard if a decline turns into a big, bad bear market. 
  • If markets stabilize and begin to recover, we do not try to guess the exact bottom. 
  • Instead, we follow a disciplined re-entry process based on predefined signals. 
  • This helps us avoid being caught in false rallies or “head fakes.” 
  • It’s important to understand that we may re-enter the market at a higher level than where we exited. 
  • That is not a mistake — it is part of the process of avoiding large losses. 
  • Protecting against major declines is more important than capturing every bit of upside. 
  • Especially for those within five years of retirement or in the early years of retirement, losses can have a significant impact. 
  • Our goal is to manage that risk so you don’t have to worry about it. 
  • We focus on protecting your retirement so you can focus on enjoying your life. 
  • For our retired clients, that means enjoying your Second Childhood Without Parental Supervision. 
  • For those still working, our job is to help you get there with confidence. 
  • We will continue monitoring the situation closely and keep you informed every step of the way. 

 

Transcript:

Hello everyone, and welcome to our weekly market alert video for today, which is March 27 2026

I hope this finds you healthy, wealthy and wise. We have a ton to talk about, and as the title of this weekly market alert video implies, we’re going to talk about what could go wrong and what could be the repercussions for our investments, our portfolio, and all of that stuff. We’re going to get into it, and we’re going to talk about what we’re going to do about it. Also we want to talk about our process, our invest and protect process. There are actually seven steps to our process, and we thought that we’ve actually never walked you through those steps, so it might be a good idea for us to actually do so, so that you know what could happen next, what could happen after that, etc. So you know the whole process that we go through from from where we are now, which is investment mode, all the way into protect mode, and then as we come out of it, and we go back into invest mode. So we have a ton of that to talk about with you, and we’re going to, as usual, have more fun than a human being should be allowed to have when talking about all this financial stuff. And so this week’s going to be no exception. So let me bring Jordan Roach, our Chief Investment Officer, into the conversation.

And oh, I didn’t introduce myself. Just let me for those of you who don’t know who I am, I’m Ken Moray. I’m the founder and CEO of retirement planners of America. And we work with people who are over 50, retired or retiring soon. And if that’s you, then our website is rpoa.com

So Jordan, good to see you.

Good to be back in not fighting through technology. Your beard is filling out. Man, you get that Ernest Hemingway look? Is that a good thing? Yeah, I like it. Yeah, rocket then, yeah, spring break last week, so we didn’t do a whole lot, and then now we’ve just, kind of just, so you just let the beard come out, and now you’ve trimmed it back down exactly. Oh, nice, yeah. I like, I can’t grow a beard. I have tried. I had these spots right here where nothing grows, and then it’s I look No, so I have a question for you. Have you ever seen a toothless baby try to eat a slice of pizza? Oh, you bet. Have you had four kids? Okay, so we’ve gone through iterations of this, and I just got a video from my daughter of her one year old. And I mean this, this baby wanted to eat that pizza, but it was like it was gumming it, it couldn’t quite get it. The video is hilarious, you know, it says, but it was maybe getting mad because she was determined, wanted, yes, she was determined to eat that and she just could not get it. And when mom tried to help her or anything, she threw a tantrum. No, I got this, do not touch the pizza. But anyway, she couldn’t quite get it down. So it’s pretty funny. So let’s talk about what could go really wrong here. And you know, on previous weekly Mark alert videos, I’ve said, Okay, we’re not going to talk about, you know, the war in Iran, because, you know, we were up to here with that, but it started to now maybe be something, yeah, that we should talk about. So what could go really, really wrong here?

Well, there’s a number of things, I mean, you know, right now, and this is the thing that maybe we’ll talk about today, is, you know, we had some percolating issues, even absent Iran here domestically, we did the economy was starting to look like maybe it was slowing down, inflation fears, had some slow growth fears, all these things, and now we stack on top of this. This is kind of reminiscent what happened in 1973 74 exogenous, you know, oil and gas crisis, right? That affects kind of inflationary concerns globally, right? You layer that on top that is not a series of things that usually, if these continue to last, ends up in markets being excited, yeah. And you know, the Strait of Hormuz obviously, is like for me anyway, as we look at it, the most important topic for people to look at. And I know, from a PR standpoint, you hear from the Trump administration. We knocked out their navy, we knocked out their air force, we knocked out their, you know, their air defenses. We did it all in like, you know, 14 hours. And this is the greatest victory in the history. And true, our military did something that is truly historic. Yes, I mean to take on that military and knock it out in, you know, basically five days. Is freaking unbelievable, but they keep repeating that, and what I keep saying to them yelling at the TV. I’m like, Yeah, but it’s not about that anymore. It’s about the Strait of Hormuz, yes. And the problem with that is it’s an asymmetric war, because what you have is you have these giant aircraft carriers, and you have all these things, and they’ve got drones and 1000s of them, and they got missiles that they can send straight to hormones, is what, two miles wide. So if you’re going through there with this big, giant aircraft carrier, and they’ll missile you to death, and you got, like, a 14th of a second to respond to that.

That, and they’ll send like, 30 of them or 50 of them at the same time. You can’t protect your assets. It’s a Kill Box. It is a Kill Box, and it’s a very, you know, hard asset to get control back over because, again, they don’t need the big boats, the big planes, no, to control it. They don’t. They’ve got $750

drones that they can send by the 1000s, yes, it’s like a swarm. And you can’t, you can’t stop them all. So we have to stay out of there. So how do we make sure that the Strait of Hormuz stays open? That’s that’s the asymmetric war that we’re fighting right now. That’s right, and that’s been part, you know, that we’ve got, I guess, given them our first round of negotiation points for a truce. And the first thing that Irene came back with is, is, nope, we get to control it. And just saying that, when them coming back, saying that we get to control it, shows that they have the full ability to control. They are, they are controlling, are controlling it, and can continue to do so so far,

as much as they want. Now, Trump said that, you know, we’ve got the USS Tripoli coming, and it’s got, like, I get different numbers. It’s like 1000 or 2500

of these. You know, elite people coming. That’s not enough to take over a country, so they must have some targeted thing. I’m thinking it’s the the, what is it called the Garth Island or, yeah, the so I think they’re after that. But even that, taking it is easy. It’s keeping it that’s hard, because now you’re even closer to land. You’re even closer to these drones and all these these missiles that could come your way. And keeping it is really tough. And if that turns into something, you could cut off 90% of the world’s oil supply for a year. If that really, if that island got blown up or something, we could go into a massive global recession, if not depression, yes. I mean, I think this is the thing that, you know, we don’t know what’s going to take to actually get control back over Hormuz, or even to technically win this war, right? Is it kinetic operations? Is it going to be, you know, land invasions? Is going to be other countries joining in. What is it going to take to technically win where you get back control, and then what it could take to get back control? What kind of devastation to rebuild would that cause in the backside? And so these are all things, I think you know why the market is having such a hard time finding direction right. And then the thing that, for me makes it, you know, I guess dubious that the Iranians want to negotiate, although President Trump said they do. And may, you know, I don’t know. I have no reason to doubt talking to Yeah, I don’t have any reason to doubt him. But at the same time, these guys are not, you know, they’re religious fanatics. And so, you know, I was talking to my wife, and I said, you know, this is the equivalent of telling a Christian that we’re going to bomb you if you don’t give up Christianity, well, they’re not going to do it, you know. So you’re asking these, these Islamic guys that it’s their religion to give up the religion of we need world dominance, and we need to have these. We need to have a weapon that makes us immune from every they’re not going to give that up. It’s their religion. You’re not talking about rational people here. I think right, that would be, that would be the concern. And so, how do you surge it, you know? So, so what could really go wrong is this thing, and from what, from what I understand, we got, like, 45 days before we start running out. And when that happens, we could start seeing prices globally just skyrocket, and we could have a real problem, like we saw in 1973 and 74 when we had that oil shock, yes, and, you know, that took the market down. What was the fourth worst sell off we’ve ever seen? Yeah, and it lasted for a while too. It was pretty almost two years to play out. And it was, it was, you know, again, there’s kind of an analog now with what’s going on domestically and then now in the Middle East to that scenario. But, you know, you had a market that was kind of selling off and then flatlining, and then selling off, and then kind of head faking up, and then eventually the big rollover came. And that’s, I think, the psychology right now of the stock market seems to be, oh, this is going to be over soon. And so it’s almost like they’re sticking their head in the sand and you know, they’re saying, I can’t hear you. You know, it’s like, see no evil, hear no evil. It’s like, this is all going to be gone soon. And you know, stock market investors are eternal optimists, that’s why they invest. And so they’re always looking for any opportunity that is going to go back up again. But if we get past a certain point, those same investors, you know, panic, that’s right, yeah, when you move from excess optimism into the panic stage, that’s where you start seeing everybody start dumping shares, and the market has to absorb that, and it’s difficult time to do so. And that’s where you start seeing all that selling pressure coming in, yeah. I mean, I look at it as, you know, the emotional journey of love to hate.

There’s no in between. You know, it’s like you go from love to hate in like an instant. There’s no love to partial love to a little bit more, a little less love, beginning of dislike. And then, you know, it’s like it this, and so.

The moment the market decides, Oh, crap, there is no end here, right? They don’t, if they don’t see it an end, that’s where people start clicking the sell. That’s right. And that could take us into a significant downdraft, like we saw in the 70s. Sure, and there’s a more than zero chance that could happen. So let’s talk about what we do in that, in this scenario. So right now, we’re very close to our signal to go into protect mode, right? And so we’re not far away from that.

Our our metrics are telling us that we’re close. So there are basically, you know, our investment protect strategy process has seven steps to it, right? So the first step is where we in right now, where we are. We’re invested Right, right? We’re in investment mode, doing anything, right? And so what happens there is the market starts drifting down, and eventually gets to the spot where we say, Okay, we’ve now met a point where we’re going to go into protection mode. Yes, so now we’re going to go into protection mode. But then there’s another decision, and that is, do we get out with 100% do we get out with 25% or whatever? So tell us about, you know, don’t get to a lot of detail, but let’s talk philosophically about our sanity checks, and how we tell us how many we have, and how we look at that from that standpoint. Yeah. So these the sanity checks are meant to do, basically just to quiet some of the noise and the motion the market itself, so it’s going to look at different parts of the economy and sentiment and credit, just to give us a more broad view of what is really happening outside of the market itself. Okay? Because that can tell us what maybe how bad things really are at, you know, outside of the market, and then how bad maybe it could go. So rather than saying, emotionally, yeah, this is going to be over in a month, or it’s not, and I’m going to invest accordingly. We have a process for it that we predetermine based on, you know, our analysis of what should get us to say, Okay, it’s time to go into protection mode, or we should stay in investment mode. Yes, and it’s intended to help us to distinguish between something that’s going to be a big, bad, protracted bear market, or one that’s going to be, you know, like, I don’t know, covid, or something, where it goes down dramatically and then it comes back, you know, within three or four months, right? It just build those sanity checks help us build the case for what is going on, right? That’s all it’s doing, is building the case weight of the evidence. And so we have, you know, four distinct things that we look at that all tell us different things. Look at different parts of the economy and as of right now and again, this happened even before Iran started kicking off. You know, there are two of those sanity checks right now that are flashing red, two of them, two. Two out of four were already telling us bad stuff is coming. Yes, and that was before the war even happened, that’s right. So I think this is the hard thing that you know prospects clients struggle with, is they can look at a market, and if there’s headline news, they can say, well, this is this market action. Is event driven, right? And so we want to dispel that and say, Well, that’s certainly not helping. But if you look even outside of that event itself, of what some you know, broader economic activity looks like it was signaling there are some problems internally, that Iran is only going to hurt, only going to make worse, only make worse, that’s right, and potentially make one or two of the other ones turn red as well. Right? Good. Now we don’t know, right, but, but the point here is that you take Iran aside, you know, you had a couple big, big economic things that were pointing towards danger, if you will, yeah, you know, a month ago. Okay, so the the our process, then let’s just go the next step. Okay, so let’s say that only two are flashing red. So therefore we don’t, we don’t go with the protection mode with 100% of our portfolio, that’s right, we may go with 25% we protect 25% or 50% right? All right, so, but let’s say then that, okay, it keeps going down and oh my gosh, it does. Looks like it’s going to be a big, bad bear market after all. So tell us about, you know, what happens next? What’s what’s the next step? Yep. So. So for us, we would remain in that posture. You know, from whatever we did initially, you know, when we move into protect mode, we’d stay in that posture

until, or if we hit what we call a safety net, right? So that is, again, a quantitative line in the sand that tells us look something the data was not catching initially, is going wrong, causing the market to sell off, we have another point where we would move further into protection. Okay? So we call it a safety net, because that’s how we think of it, right? In other words, the market is just keeping on going down. We may have only protected 25% of our portfolio, and maybe we need to protect a bunch more, because it looks like this is actually headed into a big, bad bear that we didn’t anticipate at first. Okay, so that is step three. Step four is okay. Now the market feels like it has gotten to the bottom, and now anxiety starts to fill in. Okay. Well, what you know, shouldn’t we chasing it? Yeah, are we chasing? Are we looking at the bottom?

Them, or should we, you know, so the psychology of maybe we’re near the bottom starts to kick in then, then what’s our process for that? That is, you know, in this scenario we’re talking about, like, right now, let’s just say we didn’t sell, you know, 100% going to full protection money from the start. The good news in that scenario is we would already have some portion of our capital that would immediately get relief, get upside. If the market bottomed, and we’re not trying to buy more, we have that portion that would rally alongside the market. So that’s good, right? We think of the time of like, well, we got to chase it all, because I’m not in. Well, remember, in this scenario, we potentially would have some portion of our capital in so that’s good. And we’re not trying to, we’re not trying to find the bottom. That’s not, that’s not what we’re doing. This is a process of protecting our clients retirement. That’s right, right? So it’s not about whether we’re going to hit the bottom or the peak or whatever like that. It’s a process that we’ve thought through on, how do we protect our clients retirement? That’s exactly right. And so we’re yes, we’re not, we are not trying to, you know, pick the bottom that is, that is, we would allow institutions to set stuff in early. We don’t need to do that, quite frankly. Okay, so now the market, let’s say that it’s, it’s bottom, and it’s starting to go back up again, right? And so now we’ve got what they call FOMO, right? So all of a sudden, it’s like, wait a second, the market’s going back up again. Why have we gotten in yet? You know? Why? What are we waiting for? Let’s do it now. Let’s go. Let’s get back in. Let’s, you know, let’s take advantage of this. But we don’t want to jump the gun, right? We want to wait, you know, for when our invest signal comes to us. That’s right? And so for us, I mean, we do have two disciplines to help us understand when to re enter the market fully, right? Or whatever that looks like for an individual client. So we wait for that discipline because, you know, we have studied back and forth all these big, bad bears, and you have to have a known discipline. Otherwise it’s very, very likely you’re going to get caught in what we call a head fake, right? Because the market does that. You get the FOMO. People chase the FOMO, and the market says, Nope, we got to come back down again, and you can get churned in that. So we have that discipline. We’ve two paths to do that, to give us the

let’s call it the white as we really are streaming the sunshine through the clouds. We feel like, look, we can step back outside again. Yeah. So we have very disciplined metrics that we look at to help us to decide if this is a head fake, which I like to call catching falling knives. You know, when people like decide they’re going to start buying back in too soon?

I think, you know what that visual, I think that visual might work for. You’re catching falling knives. Okay, so now the market starts to rise, and it eventually gets to our signal to go back into investment mode, so we’re going to start buying back in, and at that point, there is a, again, more than zero probability that we might go back in. Our investment where we go back in may be higher than when we went into protect mode. It’s definitely possible. And if that happens, was that a mistake? Was that bad? I mean, we know it’s going to happen. It’s part of the process. We understand it, we accept it. It’s just, it’s the process. Yes, but for somebody who feels like, you know, we invested back in, you know, higher than when we went into protect mode. What’s the flaw in that thinking? What should they be thinking instead? Well, the flaw in that thinking is understanding there is a cost, opportunity cost, if you will, that you’re willing to trade in order not to capture so much downside right? Because if you want to make sure that every single time right, that you’re trying to you know the point which you sell and the point which you buy, they’re kind of aligned, or you’re buying lower one, we’ve not found a process that can do that consistently. The other thing is, it becomes a math equation, quite frankly, at least in my view, and there is a certain amount of upside that we don’t have to get on rebounds, that if we save that on the downside, the math just works into your favor with a compounding that we can be in a healthy position. Because again, still for us, losses that you actually go through are more impactful than dollars to the upside that you do get. And that’s a very good point, because if you’re within five years of your retirement, or you’re in the first five years of your retirement that decade, then losses are significantly more important for you than for somebody you know, who’s 30 or 40 or you know, and they got 20 years to worry, you know, they can write it all out. We’re in a different place with our the people that we work with, all right? And so basically, you know, that’s our, our process. And so for everybody, especially all of you squippers out there, I know that. And skippers, again, is second childhood without parental supervision. It’s the acronym for that. So when a client of ours retires, we call you a skipper, and we want you to go and play, have fun, enjoy and let us get the gray hair. I was talking to a skipper just the other day, and they said, Yeah, you have gotten a lot of gray hair since we’ve known you. And I’m like, yeah, it’s your fault. You did this to me

and so but I’m.

Happy that you did. I’m thankful that you did. Trust me there’s I wouldn’t have it any other way. So ladies and gentlemen, I hope you had more fun than a human being should be allowed to have when talking about a process that we have our invest and protect, process that takes us through the cycle of protecting your retirement from a big bad bear. Now, of course, if it had turned out to be a big, bad bear, then you know what? Then everything would have been fantastic from our perspective, certainly not from the people that do not have a process like ours. So thanks for watching. I hope this found you healthy, wealthy and wise, and we’ll talk soon.

Please note: transcript has been modified after the time of recording. 

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