The NAOI was founded in 1997 with the mission of empowering individuals to invest via education and the use of online resources. However, as time passed, we began to realize that more than education was needed to empower individuals to invest with confidence and success. Also needed was innovation. The way that people are taught to invest today simply can’t cope with modern markets.

This needs to change. On this page I show how the NAOI is doing just that.

Why Investing Needs to Change

Today’s industry standard methodology for portfolio creation and management is called Modern Portfolio Theory (MPT). Introduced in the 1950’s, MPT dictates that portfolios be designed to match the risk tolerance of each investor, then bought and held for the long term, regardless of economic and market conditions.

The buy-and-hold management strategy used by MPT portfolios neither enables investors to take full advantage of equity market returns nor does it protect them from significant losses due to market corrections and crashes. As a result, the NAOI is seeing many people leaving the market, or not entering it in the first place. They see the risks inherent in holding static portfolios in modern volatile markets as being just too great. This needs to change and it has.

Based on a multi-year Research and Development project, the NAOI has developed an alternative to MPT called Dynamic Investment Theory (DIT) a new approach to portfolio design and management designed specifically to work in modern, volatile markets. DIT sets the logic and the rules for the creation of a new investment type called Dynamic Investments (DIs) that are capable of automatically signaling changes to the ETF(s) they hold based on a periodic sampling of market trends. By being “market-sensitive” DIs consistently produce returns that are significantly higher than traditional MPT portfolio with lower risk and no active management required.

The NAOI is now teaching this approach to the public via our extensive education network. As a result, demand for the use of DIT and DIs will grow. Financial advisors and organizations who include the new approach in their offerings will capture this demand and gain a massive competitive advantage over those that don’t.

This page provides an overview of why the NAOI believes significant change to investing methods is needed and how the NAOI is doing just that with the development of DIT and DIs.

The Catalyst for Change

Founded in 1997, the NAOI has worked with individual investors for over two decades. While we teach them, they teach us. As a result we have an unmatched knowledge of how the public views the investing world and what they want and need to enter the market with confidence and without fear. Input from individual individuals who are NAOI members tells us that the way investing works today is not meeting these needs. They see the investing world as complex, volatile, unpredictable and extremely risky. And they are well aware of the fact that owning static, buy-and-hold portfolios neither enables them to take full advantage of market return potential nor does it protect them from significant market losses. As a result, a significant number of individuals are leaving the market or are investing far too conservatively.

The Root of the Problem

The NAOI sees as a major problem with the way investing works today the unquestioned use of Modern Portfolio Theory (MPT) to design and manage portfolios. Introduce in the 1950’s when markets were a far different place, MPT dictates the use of a buy-and-hold management strategy. As a result, these portfolios are not sensitive to market changes making them dangerously vulnerable to significant losses due to market downturns and crashes that occur on an average of about once every 6 years. And it can take months or years for portfolios to recover from these losses. For example, after the market crash of 2008-2009, it took approximately 5 years for stocks to recoup their losses.

Yet, after each market crash, financial advisors continue to offer to clients the same MPT-based portfolios that people know will fail again in the not too distant future. Individuals tell us, in increasing numbers, that they are no longer willing to subject their financial futures to the risks inherent in owning static portfolios in modern volatile markets. To stem the outflow of investors from the market and to increase the number of people entering the market, fundamental change is needed.

The Creation of Dynamic Investment Theory - an MPT Alternative

The NAOI is making the fundamental changes needed by developing an alternative to MPT that is simpler, more profitable and less risky. We call this approach Dynamic Investment Theory (DIT). It was created by the NAOI based on a multi-year Research and Development project to meet the needs of the investing public; not based on decades’ old academic theories as is MPT.

DIT sets the rules for the creation of new investment type called Dynamic Investments (DIs) that are “market-sensitive”, capable of automatically changing the ETFs they hold based on a periodic sampling of equity price trends. By doing so they meet the goals of individual investors for a simpler investing process that produces higher returns with lower risk and absolute protection from market crashes.

NAOI focus groups who have been taught how to use DIT and DIs tell us that this is the approach to investing that will finally enable them to enter, or reenter, the market with confidence and without fear. And by offering this approach financial professionals and organizations will be able to grow their client base exponentially.

An Introduction to Dynamic Investments

Click the link to read an overview of how Dynamic Investments work and the amazing levels of performance they can produce on a consistent basis.