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, developed based on 5+ years of research and development and 3 more years of field-testing, creates a "next generation" investment type called Dynamic Investments (DIs).
DIs 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 investors of virtually any 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. Financial service organizations will welcome this new investing approach as well. It enables them to create and sell investment products and portfolios that are far superior to anything available today. The information on the pages of this site explains how.
Please keep an open mind as you read the information on this site. It will ask you to reevaluate everything you have been taught about investing. You will find that much of what is seen today as investing "settled science" is wrong. Prepare to get just a glimpse into the future of investing!
An "Outside the Box" Portfolio Design Approach
Today's universal standard for portfolio design is called Modern Portfolio Theory (MPT). MPT asset-allocation methods and a buy-and-hold management strategy are used for virtually every portfolio created today. MPT is "settled science" in the world of investing today and not open to question, even though it was introduced in 1952 when markets were a far different place. Click on the chart at right.
The problem is that while markets have evolved significantly in the last 65+ years, the MPT portfolios we are given today by the financial services industry to cope with them have hardly changed at all. And they no longer work. We saw that clearly in 2008 when MPT portfolios crashed right along with the stock market.
DIT and DIs were developed to solve this problem. They are designed specifically to work in today's volatile markets and extensive testing has shown that they work astonishingly well. Once the NAOI removed the artificial constraints of MPT methods, portfolios can be easily designed that produce performance that today's "experts" will say is impossible. An example of this performance is shown below on this page and more examples are shown throughout this site.
As you read the information presented here, keep an open mind. It requires you to rethink virtually everything you have been taught about how to invest. You are about to get just a glimpse into the future of investing along with directions on how to prepare for it today.
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 a portfolio must be designed to match the risk tolerance of the investor, not to take advantage of current market dynamics. 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 and development and 3 more years of field-testing we 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 below on this page and in more detail starting here. 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 from the 1050's to the 21st century. And it's about time.
Why Your Wealth Is In Danger Today!
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 yet is still in universal use today. 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 and specify no plan for ongoing management. Those elements are provided by subjective human judgments and all the risks inherent in them.
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 does it protect 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 is discussed at the bottom of this page and 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 human 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 four investments. The first two data rows show the performance for two standalone Exchange Traded Funds (ETFs) - the first tracks a total Stock index and the second tracks a total Bond index. The third data row show the performance for a simple Dynamic Investment (DI) designed by the NAOI that we call the Basic DI. The final row shows the performance of a typical Modern Portfolio Theory (MPT) - Based Portfolio with the asset allocations shown. Both the Basic DI and the MPT portfolio use the same ETFs that are shown in the top two data rows - only the investment vehicle is different.
The test period is from the start of 2007 to the end of 2016 - a full decade 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 6+ times that of the MPT portfolio even though 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 - moving up and down in value at the whims of the market. In stark contrast, the Dynamic Investment automatically rotates between the two ETFs, owning only one at a time, as automatically 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 market sensitivity and you can see how its performance suffers.
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 rules and methods crumble. Destroyed along with them is how we have been taught to invest for decades and the doors are flung wide open to new ways of investing not constrained by the past. You will learn this new way of investing on this site, in the Dynamic Investment Bible and by working with the NAOI via a consulting contract.
This Site's Target Audience
Dynamic Investments will change virtually all areas of investing today and for the better. And these benefits will accrue to both individual investors and to 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, as explained just above, 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 wealth, 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. NAOI field testing with our students tells us that 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 and by doing so have a tremedous advantage in a crowded market.
Dynamic Investments should not be seen as a threat to financial service organizations. They should be welcomed 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 high returns, low risk and absolute market crash protection offered by DIs. And the NAOI is ramping up our education offerings to make sure that the public does learn about this new approach to investing. Advisors and organizations that offer Dynamic Investments will meet this demand and thrive in the future of investing. Those that don't will lose market share rapidly and eventually fade away.
For financial organizations and financial professionals, change is not optional. See the For Professionals section of this site to learn themany ways that DIs can be used to enhance your organization's investing / financial services 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.
The Dynamic Investment Bible
This site explains an incredible new approach to investing called Dynamic Investment Theory and a next-generation investment type called Dynamic Investments. 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 explains how you can implement and manage DIs to significanlty improvie your investment returns today!
Click the book cover to go to the NAOI store to purchase this amazing book while it is still on sale!
A "Quick Start"
This is a large site with a lot of information. To get a quick overview of how this new investment type works go to the Dynamic Investment Primer page. To get a quick overview of how DIs will change the fundamental way we invest, open the Future of Investing page. After reading these pages you can then focus in on those page that are most important to your interests using the navigation menu at the top of each page.
Please consider signing up for our Dynamic Investment Updates Email at the bottom of each page. The development of DIs is moving fast as are its applications. As a part of our secure Email list you will be notified when significant events occur. We will NOT share your information with any third party and we will not overload your Email inbox. We only report events that are important. And feel free to contact us at any time with questions or to request further information using the information on our Contact Page.
The NAOI Corporate Web Site
Dynamic Investments are a product of the National Association of Online Investors (NAOI). Click here to go to our corporate site. There 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.