• This is a special Market Alert because we have reached our protect signal.
• As a result, we are moving 50% of portfolios into protection mode.
• Our goal is simple: protect your retirement from a potential catastrophic loss.
• As we always say, growth is important, but protection of principal is even more important.
• This is exactly what our process is designed to do.
• We have a seven-step Invest and Protect process, and we have now completed the first two steps.
• Step one was being fully invested while markets were moving in the right direction.
• Step two was hitting our protect signal and determining how much to protect.
• Based on our analysis, we are protecting 50% of portfolios — not 25% and not 100%.
• That decision is driven by our four sanity checks.
• Right now, two of those four sanity checks are flashing red.
• The two signaling concern are the yield curve and building permits.
• The yield curve, based on our methodology, has been signaling recession risk.
• Building permits are showing weakness in the housing market, a major part of the economy.
• Importantly, both of these indicators were already flashing red before the Iran conflict escalated.
• That tells us the current risks are not just about one event.
• The market had already been showing signs of stress for several months.
• The situation with Iran has added pressure, but it is not the root cause of the concern.
• Even if a peace agreement were reached quickly, the economic disruption would not disappear overnight.
• Supply chains, oil markets, and inflation pressures could take time to normalize.
• There are also additional risks we are monitoring closely.
• These include the growth of private credit markets, which are largely unregulated and highly leveraged.
• If stress appears there, it could create broader contagion similar to past crises.
• Valuations, particularly in technology, also remain elevated and may not be supported by current earnings.
• Inflation pressures could reaccelerate, especially given rising energy costs.
• The market had been expecting multiple interest rate cuts this year.
• If those cuts do not happen, or if rates increase instead, we could see a significant market recalibration.
• For all of these reasons, moving into protection mode now is a prudent step.
• From here, our process moves into step three, which has three possible paths.
• Path A is the “safety net,” where if conditions worsen, we increase protection further.
• This protects against the possibility that a normal decline turns into a big, bad bear market.
• Path B is a quick recovery, where markets stabilize and we re-enter based on our confirmation signals.
• Path C is a more typical scenario, where markets decline and then recover over time.
• In that case, we maintain our current posture and wait for our invest signal before re-entering.
• We do not try to predict bottoms or react emotionally.
• We follow a disciplined process designed to protect your retirement.
• It is important to understand that when we re-enter, it may be at a higher level than where we exited.
• That is not a mistake — it is the cost of protecting against large losses.
• We call this opportunity cost, and it is part of our investment philosophy.
• Avoiding major losses is more important than capturing every bit of upside.
• Especially for those within five years of retirement or in early retirement, losses matter more than gains.
• Our job is to manage that risk so you can have peace of mind.
• We are actively monitoring the situation and will continue to follow our process step by step.
• Our goal is for you to not worry about the markets and instead enjoy your Second Childhood Without Parental Supervision.

 

Transcript:

Ken Moraif
Hello everyone, and welcome to a very special market alert video for today, which is March 30, 2026, and we’re making this video for you because we have reached our protect signal, and we’re going to be protecting 50% of your portfolio. What from potentially could become a catastrophic loss. And that’s what we’re all about. As you guys know, we have an investment principle, which is number two, which says that growth is important, but protection of principle is even more important. And that’s why we’re going into protection mode. And we’re going to go into the whys and the what’s and all of that with you. And to do that, I’m going to bring Jordan Roach into the conversation, our Chief Investment Officer. And Jordan, you know, this is always kind of a busy, busy time for us when this happens, but it’s what we do, and there’s the reason why we do it is because we want to protect our clients and our scippers retirement from, as I said, catastrophic losses. And sometimes it’s important that you make moves like this to protect from that. Yeah, this is why we’re

Jordan Roach
here, right? We have a process around this. This is what we ultimately get paid to do, is protect capital.

Ken Moraif
And we have a seven step process, which I want to go through just the first three of them, because we’re now in we’ve completed step number one. We’re we’ve completed step number two. And I want to tell everybody you know what we’re going to do now next, after this one, which is step number three. And so first of all, let’s start with, why did we decide to protect 50% versus 25 or 100 Yeah.

Jordan Roach
So the process has evolved over time, right? So, you know, if you go back, you know, years ago, we would just look at our protect signal itself and just move to straight defense, right?

Ken Moraif
Everything, sell everything. Sell everything. Yes, right, every

Jordan Roach
single time. And we’ve evolved that process to kind of bring in four additional indicators, we call sanity checks, to look at different things, just to be helping kind of moderate, maybe the stock market itself, to identify what’s going on

Ken Moraif
outside of that, right? So we’re trying to distinguish between a big, bad bear like y 2k and 2008 and others, versus one that isn’t. And we use the four sanity checks to help us, and based on our research, if four of the sanity checks are red, then it means most likely this is a big, bad bear. In this circumstance, two of them are red, not four. And tell us which are those two right now? Yeah, so the two we’re looking

Jordan Roach
at right now is the yield curve. So that’s relationship between short term rates and long term rates. And just so everybody understands we’re not looking necessarily just at the what the yield curve says today, right? There’s specific methodology. We use the rates of change and trends to judge what it’s been doing, but we looked at the yield curve and that signaling red, right?

Ken Moraif
And for the for the people that want to track the yield curve, the yield curve literally changes almost like every other day. Oh, yeah, right, it moves very quickly. So we’re looking at a set number of days within the last year of what the yield curve has been negative. And if it’s over that threshold, then we count it as red, and that’s why it is there. Now, even though on any given day, it might not be inverted versus, you know, predicting a recession, yield curve moves

Jordan Roach
very fast, you know, day to day, kind of like the stock market does. So there’s a way we look at that to help us make a clear

Ken Moraif
so people who are watching Google the yield curve and say, Wait a minute, it’s not inverted. Well, we know that it’s been inverted for many days over the last year, okay? And what’s the second one will be building permits, right?

Jordan Roach
So we look at that as a leading indicator for the housing market and the health of housing market, which is a huge part of our economy, and as many probably have seen over the last couple of years, you know, housing has been stalling, slowing down, going backwards, and that’s reflected in permit data that we look which is a monthly data point.

Ken Moraif
Okay, so two of the four are flashing red, and therefore, based on our process, that’s why 50% we want to protect 50% of our portfolio from a big, bad, Major, catastrophic loss. Absolutely right. Okay, so let’s talk about, you know, in the past, we’ve we’ve thought that, you know, if we can point to a singular event that caused us to get to our protection signal, then what we would say is, once that event is over, then we just, we just invest right away, right? And so a lot of people might be saying, well, we can point to that, right? It’s the war in Iran. That’s what did it, right? And so therefore, if tomorrow, you know, they sign a peace treaty, then boom. Let’s invest back in

Jordan Roach
but, but, yeah, the but to that is, I mean, I think there’s some truth that, look, what’s going on with Iran is certainly not helping. Thanks. But we look again at these four other Sandy checks, and two of the four were flashing red prior to Iran even kicking off, even escalating.

Ken Moraif
So the two that are flashing red right now were flashing red before the Iran war even came, before anything,

Jordan Roach
before any of us even knew that was even on the docket. Okay, those are already flashing red.

Ken Moraif
Okay, and so now we have the Iran war. So therefore, you know, I asked you this the other day. I said, What? How certain are you that the Iran war is what caused this, versus something else? And what was your answer? 0% 0% so in other words, you’re saying the Iran war is not what caused this, correct? It’s just making it worse. Absolutely right.

Jordan Roach
That would be my belief system. Like looking at all the data and the range of things, what’s been going on underneath the hood and the surface for a long time, this Yes, is not helping market action, but is not what is causing the market to be having problems, or what gives us initially, you know, all the concerns going

Ken Moraif
forward, because the market was having trouble for four or five months before that, right?

Jordan Roach
That’s right. That’s right, we’ve seen volatility been picking up, you know, the market kind of stalling out for months here, prior to this, again, ever being a thing. And so you could look at concerns around, you know, whether it’s valuations or private credits.

Ken Moraif
Yeah, we’ll get into that. So, so the Iran war, in our view, has now, let’s say that they do sign a peace treaty tomorrow, right? As we record this, Donald Trump said, you know that the Iranians are want to come to the table and all that we’ll see, but let’s assume for a moment that they signed a peace treaty and all is well. Number one, when have we ever been able to trust the Iranians to do anything? Number two, right? Okay, so let’s just set that one aside, but let’s keep that in the back of our head. Number two is, once there a treaty is signed, the oil problems, the disruption of the supply chains, all the stuff that this has caught. This is the biggest disruption, maybe in history, you know, certainly on par with what happened in 1974 75 and what followed, there was a massive, major bear market. And so, you know, the recovery from this is not going to be like overnight, oh, they signed a peace treaty and suddenly everybody has oil no that. You know, it’s going to take months maybe, to ramp back up. And the repercussions of that right now are untold, right? I mean, I

Jordan Roach
think let’s just say some sort of piece of treaty or agreement was signed this week. Yes, I think it’s very likely that Marcos aprali, right? You’d have sentiment that would probably improve, drive us higher, but that does not lift the disruptive forces that this has taken. Right? What it means for supply chain, oil, gas market, that doesn’t necessarily lift concerns about this picking back up volatility around inflation expectations.

Ken Moraif
So I want to get into that. But yeah, so basically, I just want to dispel the notion that, you know, the moment a peace treaty is signed, that all our problems are over because they’re not okay. So I also want everybody to stick around long enough, because I want to go through the seven steps of our process we are about to engage into step number three. We’ve, we’ve finished steps number one and two. I’m not going to go through all seven in this one, but I want everybody to be able to see what they are. So you know what our whole process is, from soup to nuts. But before we get into that, let’s, let’s do what you just said. So before the Iran war, we had there since, since 2008 there is a shadow economy, shadow banking, that’s been going on because they put so many rules and regulations on the banking industry that it became impossible to lend anybody money. And so this whole other economy was created with no oversight, no regulations, no nothing correct. And Jamie Dimon, and you know, Dalio, and many people who are very, very knowledgeable about this stuff, say that right there could be the next 2008 because there is so much lending, there is so much going on behind the scenes that is unregulated that if this Iran thing causes the water level to go down, then you’re gonna see who’s not wearing a bathing suit. And when that happens, we could see a massive sell off in the market.

Jordan Roach
Yeah. So that’s, you know, that’s the kind of, the Advent, the, you know, emergence of this private credit space, right? So you can’t get mixing public debt and public financing as easily from traditional banks and lenders, but there’s a lot of dollars that we had through private

Ken Moraif
credit and the leverage there is unbelievable. It’s in the hundreds of billions. Yes. And if that suddenly turns sour, it could have contagion, and it could be a massive thing. The other thing is, as you were talking about valuations, we were talking about, are all these tech stocks that are valued at these massive prices? Are they even worth that? Are they worth it? Is it is it

Jordan Roach
producing anything tangible with actual earnings or perceived earnings, you know, with cash flow, and you look at valuations now versus historically? You know, there are a lot of analogs to what’s going on that lead

Ken Moraif
up to YK, yeah, the expectation caused the prices to go way up. Yes. But now. They got to build the data centers, and they got to make sure that, you know, they have the electricity to support it, because right now they’re not built, and there’s no electricity for them. They got to build so without that, they’re not going to produce anything, nope. So everybody drove the price way up, and that’s what happened with the dot coms. And then all of a sudden, it’s like, okay, but now we got to implement it. Oops, there’s nothing there. Boom, yep. So that’s another thing. And then we have inflation was picking up.

Jordan Roach
Inflation concerns around tariffs first, right? And then maybe it’s not at that low, you know, moderated 2% that people think it is or wanted to be at. And so there’s concern around tariffs that kind of subsided, or maybe is in the background with some, you know, flare ups. And now you have this coming in where, again, I think the Fed for the last couple of years has been pretty singly focused on inflation as a risk, and this could just flare that all up again.

Ken Moraif
And right now, the way the market was priced before this Iran war was based on three interest rate cuts by the Fed, so the market was pricing in all this juicing that was going to come from the Fed with three rate cuts. If the Fed says no, because inflation is heating up during because of this, and if everything doesn’t go online in one day, it’s going to there’s going to be inflation. And that’s the very high likelihood it’s possible that they say, Well, you know what, we may not lower interest rates this year. And if that happens, we could have a massive recalibration in the market, right? Because it could say all that we were hoping for is now out the window, and I’m going to sell, yeah. I mean, there’s

Jordan Roach
a lot of evidence says, you know, the monetary, the credit cycle, almost leads everything. And so you have this appetite where the market has been ready for rates to come down for years, right? A couple years, and they thought that maybe, you know, we started getting it last year. Like you said, Okay, maybe three rate cuts. Then it was maybe two. Now it’s maybe nothing, and even a hike. Potentially, they’re even

Ken Moraif
talking about maybe raising interest rates if they do that. Katie barred the door.

Jordan Roach
I would agree with that. So again, you know, those fears do not get alleviated. You’re not getting mitigated by what’s

Ken Moraif
going on? No. In fact, those fears are mid are exacerbated by this war, right? I mean, who can say, Who is there anybody that could say that this is not inflationary with this war? I mean, it is right. It’s going to have to be, prices are going to stay high, gas is going to be higher, oil is going to be higher. And because of that, we’re going to, we’re going to see inflation. And then the Fed is going to say, potentially, we’re going to leave rates where they are, which is what they did, or we’re going to we’re going to raise them. Oh my gosh. Okay, so we have that recalibration risk. So for all of those reasons, going into protection mode makes a lot of sense to us. And the Iran war is not the reason, but it’s made it worse, agreed.

Jordan Roach
I mean, we’ve seen periods where, you know, the market’s selling off. And if you looked back at our sand checks at the time, they would, kind of, they would kind of say, well, everything seems okay. You know, the market finds its footing. This period where, you know, again, the markets are selling off. And Sandy checks two, not one, not 02, or that are big ones, two big ones, two big ones, two big ones historically. I mean, if you look at the periods prior, where both of those are signaling they did not tend to lead to

Ken Moraif
healthy environments, right? Those are the two biggest

Jordan Roach
of the four. Yes. So for these reasons, it just makes sense for us to say, look, we are going to hedge. We are going to move

Ken Moraif
into protection mode here. Yeah. Okay. So what I want to do now, ladies and gentlemen, what I want to do with you now is I want to go through the seven steps of our process and bear with me. I’m going to make it more fun than a human being should be allowed to have when talking about a process. But it’s important that you understand what the process is, so you have peace of mind. Our goal is for you to have peace of mind and not to worry about this stuff and let us deal with it. So there are seven steps. The first one was that we were in investment mode, right we were fully invested. Everything was moving in the right direction. We were happy, and all was good. Step number two, which is what just happened on Friday, is that our protect trigger happens, which tells us it’s time for us to go into protection mode. And then what we do when that happens is we look at our four sanity checks, and then that tells us how much of our portfolio do we need to protect from a potential catastrophic loss. Okay, so that’s where we are right now. So I want to go through just step number three. I’m going to we’re going to put up on the screen, 456, and seven, just as bullet points, if you want to read through them, and I highly encourage you to do so, you can read them in the text accompanying this video. Okay, so they’ll be there for you. So you can see all seven steps. It’s a quick read. It’s worth it. I think it’s incumbent upon you, since you’re part of this process, that you should know what’s going on. So as we go into step number three, there are three paths that we can go once we have gone into protection mode. Okay, so just let me tell you what the first one of those is. Path A is the safety net. Okay, so Jordan, tell us, what do we mean by safety net? Why do we have that?

Jordan Roach
We have that in scenario like this, where you know you have. Say something less than four sanity checks signaling red, so we would not go into a full cash position, full protection mode. Because, again, the weight of evidence suggests that we think at some point this will the market will find its footing, go back right the same. The safety net allows us to say, look, things work sometimes until they don’t right. Data could look not great right now, but not horribly bad. We’re in a, let’s call it a, you know, protected position, but hedge position, and then things get worse. Roll over. Iran war gets worse and worse and worse. Fed does whatever else. It doesn’t really matter. But the markets continue to fall after we make our initial decision. We have to have a way to deal with that. Yeah.

Ken Moraif
So essentially, we wanted to. We said, Okay, what if our sanity checks tell us that it’s not a big bad bear, but then it turns out to be one? Yes. Okay. Now, in our research, we’ve never had that happen, right where, if all four were not flashing red, that has turned into a big, bad bear market. But it could happen.

Jordan Roach
Yeah. I mean, we go back to Lisa, 1990 we have all of them complete data. Yes, we’ve not seen a big bad bear when four sanity checks were not

Ken Moraif
already signaling, right? And now we only have two. So the likelihood is this is not one, but our job is to protect our clients and our skippers from catastrophic losses. So therefore we have to build in something that says, Okay, what if? What if the sanity checks don’t work, and it keeps going down, and it does turn into a big, bad bear. That’s where the safety net kicks in, correct All right, so that’s path A. Path B is that we have a quick recovery, right? Yeah, everything works out. Life is perfect. Inflation goes back down. The private credit doesn’t happen. You know, everything is hunky dory. The Fed says, Hey, we’re going to lower interest rates three more times this year, and everybody’s super happy, and it recovers quickly. So we have a plan for that too, right? So that’s what is

Jordan Roach
that well. So we have, for right now, we have, effectively, a confirmation signal, which is an additional buy, where for a certain period of time we look at the market action, and effectively, if things aren’t breaking down over this

Ken Moraif
period, we would re enter the market. Okay, so, so we do have a reinvest mode in the event that it recovers quickly and it looks like we’re out of the woods, right? Okay. So, so path A is, we go deeper into the woods. It gets really bad. Path B is, okay. It’s not so bad. It’s a quick recovery. It turns out everything you know, all is clear. Okay, so let’s talk about the most likely event, which is path C, which is that this turns out to be a downdraft. It continues going the market goes down from here, but then it recovers normally, let’s say, three or four months down the road. So then what happens there? Then we

Jordan Roach
basically, you know, we maintain our posture, right, our 50% risk off posture, and we wait. We wait till we get to one of our defined kind of, you know, signals to go back into invest mode.

Ken Moraif
So the the InVEST mode. So we just follow our process, right? So if it’s if it’s a big, bad bear. We have a process for that. If it’s if it’s a shallow, quick recovery, we have a process for that. And if it’s a normal bear, we have a process for that. In all of those cases, we don’t want to jump the gun, we don’t want to jump the process. We want to follow our discipline and work through the process. Now there’s a very there is something that can happen, and that is that our invest signal could come higher than our protect signal, right? So we just hit our protect signal on Friday, and when we invest back in we could invest where the market is higher than it was when we went into protection mode. Is that a mistake? Is that a bad thing does? Does the process not work if that happens? No. I mean,

Jordan Roach
I almost say, in some ways, that could be an expectation even, you know, if we look back historically, of you know, how many saying checks are read versus what the market does afterwards and say, okay, you know, where does our bicycle move for our invest signal to move lower than our protect signal? You would need a protracted bear, like a long, drawn out, fairly bad bear for the market to be down low enough to bring that invest, you know, trigger low enough. So we almost say it’s almost an expectation in a normal environment. It is

Ken Moraif
so much of an expectation Jordan that we actually have an investment principle for it that we hopefully everybody. Well, many of you have been with us for long enough that you may not remember all our investments, investment principles, but investment principle number five says there’s opportunity cost. What that means is, is that our protects, our invest signal, could come higher than where our protect signal was, and if that’s the case, that difference is the premium for the insurance we bought to protect our clients retirement from catastrophic loss. That’s called opportunity cost. Growth is important, but protection of principle is even more important, right?

Jordan Roach
Yeah, no, man, it’s a great way to look at it, right? It is exactly that. It is the cost of the insurance, the premium, right? How much upside Can we trade? Is to hopefully not experience some downside that’s magnitudes greater, correct, right? And we just make that calculation.

Ken Moraif
It’s a trade off. That’s right? And at this stage of our clients and our squarepers lives, growth is important, the protection of principle is more important. So yeah, if we give up some of the upside, that’s the opportunity cost, then you know what? That’s okay. We know that it’s expected. It’s part of the process. So I just want everybody to understand that that’s a possibility here, if that is to happen. Okay, so what’s going to happen? Then there’s step four, step five, step six, Step seven. But I’m not going to go into all of those right now, but in detail. But step four is the market bottoms. Step five is the market starts to rise. Step six is the investment signal triggers. And then number seven, which is very important, is we’re going to give you a complete round trip debrief of what happened. Okay? So everybody will know what what we went through, what happened, so we can look back and say, Okay, this is everything that happened. So those, those seven steps, are part of the text that came with this video. So everybody, if you want to read them, please do. It’s a short read, and you’ll have so much fun. Oh my god, get popcorn while you read it. It’s fantastic. So I hope that this video found you healthy, wealthy and wise. I hope that you are not worrying about all this boring financial stuff. Let us do it. Let me get the gray hair. Look at look at that beard. He’s got gray hair all over him. He’s turning gray as we just just in today’s in today’s video, you turned a shade of gray. So we’re on it. We’re minding the store. We hope you have peace of mind and we’ll talk soon.

 

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

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