In this week’s market update, Ken looks at the latest inflation data, what it could mean for the Federal Reserve, and why investors may want to keep a close eye on today’s market environment. He also revisits the lessons of Black Monday and Paul Tudor Jones’ emphasis on defense, risk management, and protecting investment principal. The discussion also covers elevated market valuations, AI-related risks, and upcoming educational webinars.

• Latest CPI and inflation trends
• What inflation could mean for the Fed and interest rates
• Lessons from the 1987 Black Monday market crash
• Paul Tudor Jones’ approach to risk management
• Protecting investment principal and avoiding major losses
• Current market valuations and the Shiller P/E
• AI-driven market concentration, spending, financial engineering, and debt
• The Invest & Protect approach
• Upcoming webinars on Medicare, estate planning, and investments

Transcript:

Ken Moraif 
Hello, everyone, and welcome back to our weekly market alert video for today, which is August 14, 2026. And as usual, I hope this video finds you healthy, wealthy, and wise. Everything is coming up roses for you, and we have a lot to talk about this week. We’re going to talk about the CPI numbers that came out, the inflation numbers, and what that means with regard to what the Fed’s going to do. We’re going to talk about something that I think is really important. And you know, Black Monday is coming up. October 1919, 87 was Black Monday. The single worst drop one day, 25% drop in the market in one day, and there’s a guy by the name of Paul Tudor Jones who actually reportedly, maybe it’s legend, made $100 million that day. Okay, now that’s 1987. That’s 40 years ago. So 100 million is a lot today, but boy, is that a lot back then. And so, what can we learn from him, and what parallels does what he thinks have with what we think? Okay, and I’ll couch it by saying defense wins championships. All right, that’s what you got to do. You got to think about defense. So first of all, before we go any further, I just want to shout out all you SCWPERing out there. I hope you are out there SCWPERing your tails off. I hope you’re enjoying your second childhood without parental supervision. All you retired clients, as you know, we call you  SCWPERs, and all you know, SCWPER your tails off. Don’t worry about it. We have cleanup crews everywhere. We’ll pick up the tails. You leave them behind. Don’t even pick them up. Just keep going. Have fun. Enjoy. Be a kid. All right. You may notice that I’m wearing my tie today, and we a few weeks ago, maybe two or three, we had the survey. We wanted to ask you guys what you thought: should I wear my tie? Should I be casual? You know, because the trend today is everybody’s cashing out, and people were telling me that I needed to cash out too, and so we had the survey, and I have the results right here, and it was pretty funny. We have a lot of a lot of people had had comments. This one, Terry says, “I vote for Ty, but in case of a tie, will there be a recount? That’s not bad. That’s good, Terry. I like that one. That’s funny. These people, let’s see. These wear a tie, wear a tie, wear a tie. You look 10 years younger without the tie. All right, I’m taking the tie off. That’s all you had to say. You looked younger without the tie. This person says, “Who cares about the tie? Is it time to get out? Well, we’ll tell you. We’ll talk about that in a minute. Okay, this. Please wear the tie. More professional. I really appreciate your weekly prognostications, philosophical sentimentalities, and platitudinous ponderosities. Wow, I’m amazed. I even could read that. First of all, these are big words, and secondly, it’s minuscule. What’d you make it so small for, Alex? Do you think I have X-ray vision or something? Let’s see. What else do we have over here? This one. So, so this person over here said this tile, this tie deal is so childish and insulting. It’s not about you, Ken. To which somebody else responded, “Hey, why don’t you come by to my next party so you can kill the vibe there? So let’s see what else we okay. I’ll finish with this one. You look much better with the tie. There’s a trend towards not wearing a tie, and it looks a little slovenly. You stand out with a nice tie because not too many people can pull it off. I mean, come on! Thank you. That’s so nice. I appreciate that. So anyway, let’s talk about what. So so the answer, therefore, it was two thirds tie, 1/3 no tie. Okay. So the tie wins. So I’m going to be wearing a tie from now on, which actually is my preference anyway. I’ve always worn a tie. You know, for the last 35 years, I’ve worn a tie every day at work, and maybe sometimes at night when my wife makes me. So anyway, let’s talk about. So what was the lesson of the single worst trading day ever?

Ken Moraif 
The the market went down, and a man by the name of Paul Tudor Jones. Okay, Paul Tudor Jones. He didn’t lose any money. In fact, the the reportedly he made $100 million on that day, and so you know somebody who does that. Maybe we need to learn something from him. So here are his rules, and what I want you to, ladies and gentlemen, what I want you to kind of think about as I go through his rules is how much they parallel our thinking. Okay, how much they are essentially our philosophy as well. So the number one rule of trading, in his own words, play great defense, not great offense. Okay. Number two, he says he assumes every position he owns might be wrong. So therefore, he decides in advance. When he’s going to sell, so he always knows in advance about his worst case loss. Okay, so in other words, he’s looking at it. He’s saying, when I buy this thing, I want to know in advance when I’m going to sell it, and that’s our philosophy exactly. Our invest and protect. We know exactly when the the metrics are going to hit that are going to tell us when it’s time for us to sell, right? That’s what we do. So we’re in line with him. He warns against averaging down. You know the market’s going down; it’s a buying opportunity. He says throwing more money at falling investments just because it looks cheap. Wall Street has an expression for that, and it’s called catching falling knives. Okay, so I’ll let you kind of have that visual for a moment, and you can see what that is. And here’s the one that I think is the most important. He treats selling not as a failure, but as protecting your principal. That’s what he says. And you know there are many psychological studies that have looked at investors, and investors feel that if they sell, that they failed. Right? They made a mistake, and so now they have to sell this thing. And nobody wants to make a mistake. So psychologically, selling is very difficult for most people. But if you change the paradigm, if you change the way you think, and you now say to yourself, “No, I’m not failing. I’m protecting my principal. All of a sudden, it makes a lot of sense, doesn’t it? And so that’s why we believe that growth is important, but protecting your principal from catastrophic losses is even more important. Okay, so there you go. So let me now frame it from the standpoint of inflation. So the inflation number came in and the market loved it, right? The inflation came in and it was exactly what everybody thought it would be. And whenever that happens, the market goes up because they feel like you know I got this, I got this, I’m in control, I know what’s going on. But but even though the inflation numbers were quote unquote benign, if you look under the hood, there’s some bad things happening there. Okay, first of all, shelter, which is the biggest part of most people’s budget, right? Housing and shelter. Well, it accounted for two thirds of the entire increase. Okay, so housing costs, shelter are going up very fast, and that’s why there’s a lot of people that feel very bad right now about how the economy is going, you know, stock market is hitting all-time highs, but at the same time, housing is becoming more expensive. And here’s one that’s really dangerous, and that is that inflation is running at 3.4 percent, but that’s faster than wage growth, which is growing at 3.2 percent. So let me repeat that: inflation is going up faster than wages are. What that means is that the consumer, middle America, is getting squeezed, and as they get squeezed, they they may stop spending. If they stop spending, then the economy goes into recession, and if recession follows, we have big bad bears. All that we know already. So what does this mean? The Fed probably is not going to raise interest rates here in their next meeting because inflation came in kind of okay. You know, yeah, jobs were terrible. You know, a few weeks ago, but who cares about that? The market’s up. So you have this whole thing where the the market is setting new all-time highs. And here’s something interesting as well.

Ken Moraif 
Pardon me. There’s a Shiller P/E, right? The the price earnings index, and this is Nobel Nobel laureate Robert Shiller, and he’s very famous for his Shiller, as he calls it, PE. And what he looks at is the the last 10 years, and he averages it out. But what you can see is that that number right now is at 41, okay. Now at the very peak, the the the.com, the highest level ever, right? Y 2k before the stock market crashed by 49% The highest level ever was 44.2, and right now we’re at 41. So we’re 7% away from being at the all-time highest that the Shiller P/E has been, and so we have a market at all-time highs. We have the Shiller P/E. We have inflation that really is not good. It’s insidious. Behind, if you open the hood, and yet what does the stock market do? It just keeps going up. It’s roaring. Everything’s fine. Why? Because everybody’s betting on AI, and we’ve been telling you over the last several weeks there are four things that are driving AI, and and they’re kind of concerning. One of them is that the stock market is concentrated in these 10 stocks that represent that whole thing, and they’re 40% of the whole stock market’s value right now. That is dangerous. If those companies fall, they could take the whole market down with them. The other thing is they’re spending like drunken sailors. They’re going to spend $725 billion this year, and and that’s up 77% from last year. They’re spending money like nuts. And then the other thing also, which we’ve chronicled for you, is. The financial engineering that’s going on; these companies like Amazon and Google and others, what they’re doing is they’re buying these small AI companies at low prices, and then when they absorb them into their company, those companies’ stock value goes up immediately to theirs. That leverage, that difference, that is not real. That’s financial engineering, but it makes the stock price go up. So that’s another thing. And then the biggest one that worries us the most is that they’re paying for it all-not all, but a vast majority of it-with debt. They’re going into debt. These companies that had hundreds of billions of dollars in cash and they were making all this money now they’re going into debt. It’s an arms race. We got to get it all built out as fast as possible, so we don’t get left behind. And so they’re borrowing billions and billions. And we all know that the Satan of your finances is debt, right? You don’t want a lot of debt. Now you’re vulnerable. You’re vulnerable to an economic downswing. You’re vulnerable to your profits not hitting where they need to be, and suddenly you can’t pay your debt. So this all is a kind of a brew. Now, am I trying to scare you? No, no, I’m not. What I’m trying to do is reassure you, because we have our invest and protect process. Okay, we are philosophically aligned with Paul Tudor Jones. Defense wins championships. Offense doesn’t. Offense is exciting. It’s wonderful. It has ratings, but defense wins, and we have a we believe a very strong defense. And if the market decides that this all is a house of cards, which it could, it could not. I don’t know, but I do know I want to plan ahead. I want to know in advance, just like Paul Tudor Jones did, and he avoided that big loss that happened in 1987, and we want to do that for you. So I hope I’m giving you peace of mind. I’m not trying to scare you. One thing here that I’ve been told that I have to read to you because if I don’t, I’ll get in trouble. So we’re starting a new thing. This is wonderful. It’s great. It’s absolutely. I don’t know. I can’t. The words escape me, and that’s hard for me. We have what we are calling our third Thursday webinar series starting on Thursday, august 20. Okay. I want this to be a habit for you, where you tune in to the webinar every Thursday, every third Thursday of the month. So the next one is August 20, and we’re going to start it with Medicare 101. Okay, we’re going to have a specialist on.

Ken Moraif 
We’re going to be talking about Medicare enrollment, how to maximize your your coverage for the least amount of cost. You know all that stuff that has to do with Medicare. It’s in that season. It’s coming up now, and so we want to get you ahead of that so you’re ready. You can make your decisions, and you’re informed. On the 17th, September 17th, the following third Thursday, we’re going to be talking about estate planning, how to pass on to your greedy, unwashed, undeserving heirs the fruits of your labor at the least tax, most cost-efficient way. I think it’s worth attending. Maybe yes, maybe no. I think so. So make sure you do that. And then on October 15, we’re going to have our quarterly investment update, which you do not want to miss because Jordan and I will be going over your portfolio and all of that. So you can find it on your on the website rpoa.com and make sure you register for it so we know you’re there and we can make sure we put on a great show and informative show for you. Well, we’ve covered a lot. I hope you enjoyed this as much as I enjoyed making for you, because you know what? For me, this is the most fun. And from now on, Alex, I love you know I like wearing a tie. Anyway, we’re going to be wearing a tie from now on. So thank you for watching, and we’ll talk soon.

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