Hello and welcome to a very unique investing Web site. Here you will learn a completely new approach to investing in the form of Dynamic Investment Theory (DIT). This theory creates "next generation" investment types called Dynamic Investments (DIs) that periodically and automatically change the equities they hold based on 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.
On this site you will discover that traditional, asset allocation portfolios are not the only way to invest and not close to being the best way to invest. Via this site you are about to experience the future of investing. Prepare to be amazed!
Introductions and the Origins of Change
Allow me to introduce myself as Leland Hevner. I am the President of the National Association of Online Investors (NAOI) that I founded in 1997. The NAOI is the market's premier vendor of comprehensive and objective investor education. Thousands of individual 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 how to design portfolios using traditional, asset allocation methods as described by Modern Portfolio Theory (MPT). The goal for each student was to create a portfolio that matched his or her risk profile. There is no consideration of current market conditions using the MPT portfolio design approach. During the class the market started to crash and I watched as the 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 in modern markets. 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 close to 5 years of research, testing and development I found it in the form of Dynamic Investment Theory and the use of Dynamic Investments that the theory creates. You will learn about both on this site. These are the investing innovations that the NAOI needed to empower the public to take full advantage of the wealth generation potential of US equity markets and to enable financial organizations to gain a massive competitive edge in a crowded market.
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 portfolio design theory 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.
The problem is that markets were a very different place back in 1952 when MPT methods were introduced (see the chart at right). In the past 7 decades market dynamics have evolved significantly while MPT portfolio design methods 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 the owner to take full advantage of positive potential available in the market nor to be protected 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 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 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 financial security 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 Portfolio book (see below).
Dynamic Investments - A Next Generation Investment Type
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 really don't care about any investor's "risk profile." They are laser-focused on capturing the 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 market trends and automatically buying only Exchange Traded Funds (ETFs) that track asset types, markets or market segments that are trending up in price while avoiding or selling ETFs that are moving down.
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 of human advisors or "experts" 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. Below are the returns for two simple Dynamic Investments designed by the NAOI. They are the NAOI Core DI and the NAOI Primary DI. Shown in the Table are the backtested returns for the period from 2007 to mid-2016 for each DI. Also presented for each is its Sharpe Ratio for the period which is a risk measure showing the amount of return the DI produced for each unit of risk taken; the higher the ratio the better and anything greater than one 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.
Your first thought may be that these return levels are impossible and that it must be a scam! This is a very understandable reaction. You have been taught for all of your investing career that returns on the order of even 10% are rare and require a very high risk tolerance level. Dynamic Investment Theory shows that this is out-dated thinking. It is common for Dynamic Investment returns to be more than double or triple that of MPT portfolios and with less risk. When we are unchained from the unnecessary constraints of the MPT approach, returns like those shown above become not only possible but probable.
Equally stunning is the fact that higher DI returns DO NOT come with increased risk, they come by simply designing a Dynamic Investment to search a larger area of the market for positive returns. In the above example the Core DI searched only stocks and bonds for positive returns. The Primary DI searched 4 areas of the market. By severing the link between risk and return, MPT concepts and methods crumble. And destroyed along with them is how we have been taught to invest for decades.
The Dynamic Investment Bible
In July of 2016 the NAOI released to the public our new approach to investing via The Dynamic Investment Bible shown at right. It can be purchase it in the NAOI store. In this publication you will learn how Dynamic Investment Theory was developed, the logical foundations of the approach and how Dynamic Investments work. You will also learn how to create, implement and manage this "Next Generation" investment today! Read more about it here.
This is more than just another "how to" book on investing that you might find on Amazon for $19.95. Rather this publication is more akin to a research paper that a financial organization might commission to improve their investment offerings, increase revenues and gain market share. With detailed information on how to create and utilize a new, superior approach to investing, this book contains more actionable information than can be found in research reports that companies have spent tens of thousands of dollars to create!
No, this is not just another book on investing. It is a blueprint for the future of investing!
The Target Audience
If you are an individual with money to invest you must read this book. 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 will be able to take more personal control of your financial future and aim for return goals that "experts" today will tell you are impossible. See the For Individuals section of this site for more information.
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 via this book, NAOI Courses and NAOI social media efforts, they will demand them and the performance they produce. Responding to consumer demand for a better approach to investing will not be optional. As a member of the financial services industry you need to be aware Dynamic Investments, not only to answer the public's questions about DIs, but also to compete against competitors that embrace this next-generation investment! See the For Professionals section to learn the multiple ways that DIs can be used. To learn how you can easily integrate DIs into your product line with minimal disruption to existing operations go to the Consulting section of the site.
Change Is Not Optional
In my position as President of the nation's premier supplier of objective investing information, I interact with hundreds of average investors every year. I know that they are not happy with the way investing works today. In its present form, investing is a world made so unnecessarily complex that people cannot navigate it on their own. As a result they are forced to depend on financial advisors, who are also salespeople, for both investing education and advice. Then they typically just accept recommendations without question. This dynamic makes the industry extremely wealthy while the public ends up holding portfolios with mediocre returns and high risk. In today's world of investing financial organizations have all the power; individual investors have almost none.
This cannot continue. Input from NAOI students who have used DIs tells us that this new investment type is the catalyst needed to force much needed, industry-wide, change. DIs are an investment type that produces returns that no MPT portfolio can match, yet it is so simple to implement and manage that individuals of all experience levels can do so by themselves, if they choose, using an online broker.
In addition, DIs are standardized investment "products" that require no customization for individual risk tolerances. Once they are designed, they go on auto-pilot, making trades based on empirical observations of market movements - not based on subjective human judgments. As a result DIs can be bought off-the-shelf from any organization that offers them. When the world of investing is "productized" in this manner and investing clients have the power of choice, the cleansing forces of competition are unleashed and financial organizations will be forced to improve their products and services to remain viable. In the future of investing there will be a more equitable "power balance" between sellers and buyers and this will benefit both.
Financial organizations that embrace the inevitable change to come and start planning for it now will thrive in the future of investing. Those that resist or ignore change will die out. That's how evolution works.
A Transition Plan
Dynamic Investment Theory and Dynamic Investments change investing at its very core. The NAOI knows that such a dramatic change will not happen overnight. Therefore, we have created a transition plan that allows financial organizations to gradually integrate DIs into their offerings without disrupting existing income streams. We have even designed hybrid investment products that include elements of both MPT portfolios and DIT investments. To view several examples go to the DI Products area of this site. Financial organizations should seriously consider taking advantage of NAOI consulting services to incorporate Dynamic Investments into their strategic plans easily, efficiently and with minimal expense.
A Dual Purpose Web Site
This site serves two purposes. Of course it is a marketing site created to sell books and DI support services. But it is also an education site. On these pages you will learn how Dynamic Investments work and why they are poised to define the future of investing. We suggest that you step through the menu items at the top of this page to take in the full scope of what Dynamic Investment Theory is and how the Dynamic Investments it creates will change virtually every aspect of the investing environment. Then, take action. If you are an individual investor purchase The Dynamic Investment Bible. If you are a member of a financial organization consider working with us via an NAOI Consulting Contract.
The NAOI Corporate Web Site
Also be aware that a separate Corporate Web site exists for the National Association of Online Investors. There you will learn about the NAOI's larger mission of empowering individual investors via education and innovation - a task we have been engaged in since 1997.