Introducing NAOI Dynamic Investments
The Most Significant Investing Development in Decades!
Hello and welcome to a very exciting Web site presented by the National Association of Online Investors (NAOI). Here you will learn a completely new approach to investing in the form of Dynamic Investment Theory (DIT). This theory creates a "next generation" investment type called Dynamic Investments (DIs) that periodically and automatically change the Exchange Traded Funds (ETFs) they hold based on current market trends. By doing so they are capable of earning annual average returns of 20% and higher on a consistent basis without excessive risk. And they are so simple to use that individuals of virtually any investing experience level can use them immediately upon completion of The Dynamic Investment Bible book that is discussed below on this page and in more detail here.
As you read the information on this site, keep an open mind. It requires you to rethink virtually everything you have been taught about how to invest. You are about to get a glimpse into the future of investing. Prepare to be amazed!
Introductions and the Seeds of Change
Allow me to introduce myself as Leland Hevner. I am the President of the National Association of Online Investors that I founded in 1997. The NAOI is the market's premier vendor of comprehensive and objective investor education. Thousands of individuals have learned how to invest by reading our books and/or taking our college classes.
In 2008 I was teaching a college class on personal investing and showing students how to design portfolios using industry-standard asset allocation methods as set forth by Modern Portfolio Theory (MPT). MPT states that the goal for each investor should be to own a portfolio that matches his or her risk profile. During the class the market started to crash and I watched as the MPT portfolios my students were creating crashed right along with it. At that point, after close to a decade of teaching MPT methods, I had to admit that they no longer worked. More than education was needed to empower students; investment innovation was also required.
With this realization I cancelled all future classes until I could find or develop a better approach to portfolio design and investing in general. After 5+ years of research, development and testing I found it in the form of Dynamic Investment Theory (DIT) and the use of Dynamic Investments (DIs) that the theory creates. You will learn about both on this site. This is the investing innovation needed to empower the public to take full advantage of the wealth generation potential of US equity markets. This is the catalyst needed to "evolve" the world of investing to work in 21st century markets.
Modern Portfolio Theory - Not So "Modern"
Before describing the new Dynamic Investment Theory, let's put Modern Portfolio Theory (MPT) to rest. MPT is a theory of portfolio design that was introduced in 1952. It's goal is to build portfolios that match the risk profile of each individual investor. This is done via asset allocation primarily between stocks and bonds. People with higher risk tolerances get a higher allocation to stocks while lower risk individuals get a higher allocation to bonds. Once designed, MPT portfolios are then meant to be held for the long term. MPT design methods have no sensitivity to market movements.
The problem is that markets were a very different place back in 1952 when MPT methods were introduced (see the chart). In the past 7 decades markets have evolved significantly while the portfolio design methods we use to cope with them today have barely changed at all. It is little wonder that they no longer work in modern markets.
The fact that MPT portfolios are static, buy-and-hold investments neither enables investors to take full advantage of positive returns potential available in the market nor protects them from market downturns and crashes. We saw evidence of MPT's inability to cope with dynamic markets in 2008 when millions of investors lost up to 50% of their portfolio value as the stock market crashed. In contrast, if you had owned the simplest NAOI Dynamic Investment in 2008, instead of losing 50% you would have gained +33% as the DI automatically switched from stocks to bonds as the market started its melt-down.
The bottom line is that if you own an MPT portfolio today, and odds are good that you do, your wealth is in danger. The sooner you integrate Dynamic Investments into your investing plan the better! Learning how to do so starts with the information on this site and in The Dynamic Investment Bible book that can be purchased here.
Dynamic Investments - The Wave of the Future
Dynamic Investments (DIs) are designed to take maximum advantage of today's market dynamics. They love volatility and are not bothered by market uncertainty. Plus they don't care about any investor's risk profile. They are laser-focused on the universal goal of capturing the positive returns potential that exists in some area of the market at all times and in any in economic condition.
Dynamic Investments meet this goal by periodically sampling trends in multiple areas of the market and automatically buying only Exchange Traded Funds (ETFs) that track asset types, markets or market segments that are moving up in price while avoiding or selling ETFs that are moving down.
Unlike MPT portfolios that are purposely designed to hold both winning and losing investments at all times, DIs strive to hold ONLY equities that are moving up in price. And they do so based on objective market observations, not on the subjective judgments that are the source of much that is wrong with investing today. You can read more about Dynamic Investments by clicking this link.
Do Dynamic Investments Work?
Yes, Dynamic Investments work and amazingly well. Presented in the table below are the backtested returns for a simple Dynamic Investment designed by the NAOI that we call the Basic DI compared to a typical MPT portfolio with the asset allocations shown. The same Exchange Traded Funds (ETFs) are used in both investment types. Only the investing vehicle is different.
The test period is from the start of 2007 to the end of 2016 - a full decade worth of data. The "Sharpe Ratio" of each investment type for the period is the amount of return each investment produced for each unit of risk taken; the higher the ratio the better and anything greater than 1.00 indicates a superior investment. The bottom row of the table shows the returns and Sharpe Ratio for the S&P 500 stock index for comparison purposes.
I think you will agree that the DI performance is amazing. Its average annual return is almost 5 times that of the MPT portfolio and both use the same ETFs! What's the difference? The difference lies in how these ETFs are managed. The MPT portfolio simply buys and holds each ETF for the long term. The Dynamic Investment automatically rotates between the two ETFs, owning only one at a time, as determined by current market trends. In other words, the Dynamic Investment is sensitive to changing market conditions and is "time-diversified", the MPT portfolio is not.
Equally stunning is the fact that the higher DI returns do not come with increased risk as indicated by the DI's Sharpe Ratio being close to 4 times higher than that of the MPT portfolio. By severing the link between risk and return, MPT concepts and methods crumble. Destroyed along with them is how we have been taught to invest for decades and the doors are flung wide open for new ways of thinking about how we invest.
This Site's Target Audience
Dynamic Investments will change virtually all areas of how we invest today and for the better. And these benefits will accrue to both individual investors and the financial services industry that serves them. Here's how.
If you are an individual with money to invest you must read The Dynamic Investment Bible. Today your savings are most likely under the control of a financial advisor who is also a salesperson. And odds are good that the portfolio design approach they used to create your portfolio is based on Modern Portfolio Theory (MPT) methods that are outdated at best and obsolete at worst. As a result, your savings are in danger. When you learn about NAOI Dynamic Investments you will be able to take more personal control of your financial future, first by protecting it from market crashes and second by enabling you to aim for return goals that "experts" today will tell you are impossible to achieve (and they are using MPT methods). See the For Individuals section of this site for more benefits of using Dynamic Investments.
Financial Professionals - Change Is Not Optional
If you are a Financial Professional you must also learn about Dynamic Investments. Changes are coming to the world of investing and they are coming fast. When the public learns about Dynamic Investments they will demand them and the performance they produce. Responding to this consumer demand will not be optional for organizations that want to retain current business and capture more. As a member of the financial services industry you need to be aware of Dynamic Investments, not only to answer the public's questions about DIs, but also to compete against competitors that embrace this next-generation investment type.
The introduction of Dynamic Investments to the market should be welcomed by the financial services industry with open arms. This new approach to investing will bring millions of people with money to invest back into the market. These are people who don't understand how investing works today and are not willing to risk their financial security for 5 - 10% annual gains, at best, with unlimited loss potential. They will not reenter the market if MPT, buy-and-hold portfolios are their only option. They will reenter the market in droves when they learn about the performance potential of Dynamic Investments. And the NAOI is ramping up our education offerings to make sure they do learn about this new approach to investing. Advisors and organizations that offer Dynamic Investments will meet this demand. Those that don't will lose market share rapidly and eventually fade away. For financial organizations and professionals, change is not optional.
See the For Professionals section of this site to learn the multiple ways that DIs can be used to enhance your organization's investing product line. Then go to the Consulting section of the site to learn how the NAOI can assist you in transitioning quickly and efficiently into the future of investing.
Get Your Copy of The Dynamic Investment Bible Today!
This site explains an incredible new approach to investing. After reading the information presented here, go to the NAOI Store to order The Dynamic Investment Bible in order to take action based on what you learn. This easy-to-read book shows you in a step-by-step manner how to use Dynamic Investments to earn returns that today's "experts" will say are impossible and with minimal risk. Average annual returns of 20%+ are possible using even the simplest Dynamic Investment and 30%+ annual returns are not uncommon. This book explain why and how.
Click the book cover to go to the NAOI store to purchase this amazing book while it is still on sale!
For a Quick Overview
This is a large site with a lot of information. To get a quick overview of Dynamic Investments go to the Media Center - reporters like things short and too the point!
The NAOI Corporate Web Site
Dynamic Investments are a product of the National Association of Online Investors (click to access the NAOI site). On ourcorporate site you will learn about the NAOI's larger mission of empowering individual investors via education and innovation - a task we have been successfully engaged in since 1997.