• Despite headlines about a government shutdown, markets have remained calm, with stocks finishing the week higher.
• The absence of the latest jobs report may actually help avoid confusion, given how frequently past reports have been revised by hundreds of thousands of jobs.
• At RPOA, we do not rely on jobs data in our decision-making because it is often revised and unreliable. We prefer to focus on stronger, more consistent indicators.
• Artificial intelligence is reshaping the labor market, but history shows stock prices are driven by profits, not jobs. Companies cutting costs with AI may see profits rise even as employment data weakens.
• Lower interest rates, combined with already strong corporate profits, create a tailwind for stocks especially in the technology and AI sector.
• Nearly 27% of the S&P 500’s performance is now tied to AI-related companies, echoing patterns seen during the dot-com boom of the late 1990s.
• While this rapid growth creates opportunity, it also increases the risk of a bubble forming if expectations outpace actual results.
• We manage that risk through our Invest and Protect Strategy, designed to reduce exposure if markets turn sharply lower.
• In addition, we are currently rebalancing portfolios. Taking profits from areas that have run up sharply and redistributing them to maintain your risk profile.
• Rebalancing ensures that the market doesn’t decide your risk level. It’s one of the disciplined steps we take behind the scenes to protect and preserve your retirement lifestyle.

Transcript:
Ken Moraif
Hello everyone, and welcome to our Market alert Video for today, which is Friday, October 3, 2025. My goodness, time flies when you’re having fun, doesn’t it? I am in Houston, and so therefore the fancy background. And so I hope this video is finding you healthy, wealthy and wise, and for those of you in SCWPer nation, I hope you are out there, SCWPering your tails off and enjoying the heck out of your retirement. You earned it. You deserve it, and I’m so glad that if we helped you to get there, that we did that for you. So we have a lot to talk about today. We have interested the government shutdown, which we actually are not going to talk a lot about because at this point I feel like it’s been talked to death, and you probably have heard everything there is to hear about it, but we are going to touch on it. So let me bring Jordan Roach, my chief investment officer, into the fray. So Jordan is in the Darth Vader room over there looks like

Jordan Roach
little dark today.

Ken Moraif
You’ve got the you’ve got the space behind you, the final frontier. That’s right. Have more fun today than we we should be allowed to have when talking about all this boring financial stuff. And so, you know, let’s talk first of all about the government shutdown, and what a ho hum it has been. In fact, the market yesterday was up, and as we record it today, it’s up as well. So it just appears like nobody cares, at least the markets don’t.

Jordan Roach
I don’t think so. I don’t think the market views this is going to change the economic or cycle that we’re in right now. And so it’s just, it’s a whole lot of nothing, right? Markets are marching on everything’s up for the week, nothing,

Ken Moraif
yeah, but with the government shutdown, we did not get the jobs report. What? What are we going to do without the jobs report? Jordan, we have to have it.

Jordan Roach
It’s almost good. Hopefully it brings, actually, more clarity to the Fed. Without having that report, that’s usually wrong, right? So I think, you know, I think the Fed knows where the trend is, their concerns. And I think not having that report didn’t change a thing. So it’s probably good given all these revisions they constantly make anyways, right?

Ken Moraif
Yeah, and if they make decision, I would actually, you know, we don’t use jobs reports as part of anything of our decision making, because, in our view, it’s kind of irrelevant. But if you look at the Federal Reserve, they’re making these massive decisions, you know, based on these job reports, and then a year later, the jobs report gets revised by a million jobs. So they were making decisions that were based on data that was so wrong, that was a decision they made a year ago. You know, was it even a good one, given how bad the data they’re using

Jordan Roach
is right? So, exactly right. So, you know, I think they probably know as much as ever that, you know, it’s a data point one that’s probably unreliable, and I don’t think it’s going to change their thinking not having that data right leading into the October meeting, what they might do. So maybe all things considered, it’s a good thing that is shut down and they can’t produce that report.

Ken Moraif
I think it is, I mean, I don’t know what you can gain from a from the report that the data is so terrible. I think they need to re think the entire process of getting what the jobs numbers are in today’s day and age, with technology and now with AI, there should be a way to get numbers that a year later are not revised by 1 million jobs that, you know, it seems to me, it should be more accurate than that. And until then, I don’t think anybody should rely on the actual data and maybe just look at the trends instead. So the other thing that that it occurs to me, Jordan, is that, you know, AI, you know, unfortunately, is a job killer. Yeah. I mean, there are a lot of jobs that are going to go away because of AI. But does that necessarily mean that the stock market is going to fall because there’s more and more joblessness because of AI.

Jordan Roach
This is the interesting dance that I think you know we’re playing right now, is you have, you know, this huge run towards AI development, infrastructure and spending, which can lead to productivity, right? And if you have effectively, if AI can be used to give more predicted, you know, productivity for less human capital costs that could create margins where they widen and this and and investors go, yay, let’s invest more, right? Stocks go up at least in the short term, right? And this is that balance we talked about. So. But I think right now, you know, I think that’s one thing that’s interesting is that, yeah, we’ve had some weakening in the labor market. By some metrics, stocks March on, and maybe that is because of these AI efficiencies, right? Or at least, or perceived efficiencies,

Ken Moraif
right? Yeah, you know, I mean the example that I’ve used for years to explain why the stock market really doesn’t care? I mean, it cares, but it doesn’t care about jobs. Is because, let’s say that Walmart, and I don’t know how many employees they have, let’s say they have 100,000 employees. Yeah, and let’s say that tomorrow they figure out how to use AI to eliminate all 100,000 jobs so they have no more employees. All the Walmarts are AI driven, and there’s no people in there that work there. Well, what would that do to their profits? Their biggest cost is most likely labor. And if that cost went away, their profits would soar. And if their profits soared, guess what their stock price would do. So, you know, the stock market is nasty. It’s mean. You know investors, they care about profits. They don’t care about jobs. So, you know, they’ll look at Walmart and say, We don’t care how many employees you have. We care how many profits you have.

Jordan Roach
That’s right. No, I think that’s exactly right. So that’s, again, that’s the interesting thing here, of where maybe we have to reset our expectations, maybe the feds have to reset their expectations. Of like, what does a healthy labor market actually look like, right? If we’re less labor driven than we were 50 years ago and producing more, everything has to reset here. So it’s going to be a really interesting balance that we see going forward.

Ken Moraif
So, you know, we were talking about the government shutdown before we started our video today, and we were talking about whether we should even spend any time talking about it. Because everybody probably has seen every article and every debate. You know, it’s like the government shutdown is like, all over the place. So I just want to tell everyone, we know there’s a government shutdown, and we’re not particularly worried about it, you know, because eventually, you know, nobody wins, and politicians understand that. So there could be a drop in the market. If there is, we’ll adapt to it accordingly. But we’re not going to spend a lot of time talking about the history of shutdowns and all that stuff you’ve probably heard that at infinitum. So let’s talk about so profits are up right now. All right. Companies are making a lot of these big tech companies that are building out the AI infrastructure and making huge profits. Yes, and jobs are trending downward, which means, therefore the Fed is worried about that, so they’re going to potentially lower interest rates. So if you have an environment where companies are making profits and then interest rates go down, what does that do to their

Jordan Roach
profits? Again, that’s an that’s another tailwind, right? Because what’s going to allow them to do is whatever debt they do hold, they can potentially refinance into lower rates. It means the cost of new capital is lower, which they can use to create more AI developments and more AI dollars that are being deployed. So again, it’s another thing that I could lead to the market to another leg higher, for sure, and keeps it marching into a bubble? Maybe, I don’t know.

Ken Moraif
So we have lower interest rates when companies are already making huge profits to compensate for the trend in jobs. And that’s a yay from a profit standpoint. And again, what drives stock prices is profits, in our view. So we’ve got this thing. And what, you know, we talked about, or I talked about last week in our market or video, is that this has a lot of the earmarks of the bubble that happened. You know, back in the.com era, almost 30% of the stocks of the s and p5 100 index were stocks that were benefiting from the internet, and they drove the stock market through the roof. And right now, we’re seeing a very similar story where 27% according to Bloomberg, is now these companies that are benefiting from this AI revolution, and they’re driving the stock market way, way up. So we have the similar dynamic, 200% gain in those stocks over the last two, two and a half years, tremendous, just like the dot coms. So the lowered interest rates will drive even more people to invest in these companies. So we’re marching right towards maybe an even bigger bubble. Yeah.

Jordan Roach
So you know, the interesting thing here, I think, is, is people are flooding into these companies for perceived benefit, right? These, these productive, marginal benefits from Ai deploying AI, that it’s going to increase productivity, and they’re going to return on this capital. And so they’re plowing dollars in almost. Not even expecting a return, right for how are you using AI? Is like, are we actually getting return on those dollars? And I think where the rubber could meet the road is at some point, investors look up and go, Wait, we’re pouring billions and billions and billions into AI, and are we really actually getting a benefit from there? Is there a return? Do we know how to really use AI. We’re spending money on it, but at some point, can we use it, just like back in the.com you know, the late 90s, moving into 2000 we have all, you know, the internet. But do we actually know how to use it? And that could be where it gets, could get, you know, a little bit dangerous,

Ken Moraif
yeah, there are other precedents for infrastructure being built. Everybody getting super excited, and then monetizing that infrastructure takes a little time. You know, AI right now, I saw a Forbes magazine. I think it was Forbes or Fortune that said that 95% of the companies out there that are implementing AI to help productivity are finding it doesn’t work. They don’t know how to do it. And that’s similar to what happened again in the dot coms. And if you go back to the days of the railroads, everybody was super excited, you know, they’re going to build these railroads. It’s going to create all kinds of jobs. It’s going to create all these things. You know, they’re going to be these cities that are going to come up and all that, which eventually happened. But these railroad stocks went through the roof. But then there was like, Okay, well, how do we monetize this? There are no cities, you know, these railroads are going across the plains. There’s nothing there. And boom, those stocks collapsed, and there was a big, bad bear market. Same thing that happened with the dot coms, and maybe that’s where we’re headed for now. So the way that we address this increased risk that happens, of course, is with our investment protect strategy. You know, if the market collapses, we have, you know, we have that to help us. But I also would like to share with our clients and skippers another strategy that we use, that you may or may not be familiar with or remember, that we do every quarter. We’re about to do that now. So just to explain how rebalancing works, I’d like to, just to refresh those of you who haven’t seen this in a while. Is I want you to imagine for a moment that you have a 5050, portfolio. Okay, so that would be and you have $200 to invest. So you put $100 on each side. Now let’s say that’s the risk profile that we’ve chosen, right? 100 $100 5050, now you may be 6040, or 7525, whatever, but I’m using 5050, just to make the math easy. So we have $100 on each side. And let’s say the side on the left is all that the AI stocks or technology, or whatever it may be, and it goes up 60% it just goes up tremendously, and so but the other side doesn’t do well. It loses 10% so now we have a situation where the left side has $160 and the side on the right has $90 so if you add it all up, we’ve made 25% that’s fantastic. We’re happy about that, but we have a problem, and the problem is, is that we are now overweighted on the side on the left. Now we’ve increased our risk. We’re no longer 5050 right. We are way weighted on the side, on the left. And history tells us that that can’t go on forever. Eventually that’s a side that is likely to crash. So how do we fix this problem? Well, we rebalance. What it means is we’re going to buy low, buy the side on the left, on the right, $35 and we’re going to sell high, the side on the left, which is the minus 35 which, by the way, ladies and gentlemen, that’s the preferred method. I’ve met. People have tried it the other way, and they tell me it doesn’t work. Although one guy told me, yeah, but we make it up on volume. If you just keep doing it, it works out. But anyway, so if you do that, then it brings you back to your 5050, so this rebalancing is what we do, and we’re doing it now as as you as this video comes to you to take profits from the side, from the the portions of our portfolio that have gone up so tremendously over the last quarter. Now it doesn’t mean we’re out of them. Okay, because again, we still have $125 on the left. We started with 100 so we’re not getting out of them. We’re just reducing the froth, if you will. We’re reducing our exposure and keeping our balance. We want to be 5050, we don’t need the market to change that for us. If we consciously want to make that decision, we can, but you can’t let the market change your portfolio for you. They’re not the boss. We are the boss, and we manage, and that’s how we should manage the risk. So I just wanted to share that with you, ladies and gentlemen, because that’s something that we do that you may have forgotten, because we do it behind the scenes, and a lot of times, you know, if we don’t tell you, you don’t notice that we did it. So I think that’s what we have for you this week. You, Jordan, thank you for joining us in your giant black room. Look like you’re in some time here you’re in the hangar from Star Wars. You know where all the spaceships are. Yeah, that’s right. So ladies and gentlemen, SCWPerS and clients, thank you so much for joining us today. I hope this video found you healthy, wealthy and wise. For those of you who are not skippers yet, you’re not yet enjoying your second childhood without parental supervision, our job is to get you there when you want to and in the way you want to, and then to keep you there once you get there. And for those of you who are already SCWPerS and you’re out there enjoying your second childhood. Good on you. I hope you are doing it to the max. So thanks for watching. Share this video with your friends and family and send them our way. We want to help as many people as possible, and then also make sure you like and subscribe and we’ll talk soon.

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

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023