The NAOI has designed Dynamic Investments (DIs) and Dynamic Portfolios to provide amazing benefits for both individual investors and for the financial advisors and organizations that use them. On this page are listed just a few of the benefits that will accrue to individuals. The benefits for investing professionals and financial organizations are found at this link.

Dynamic Investment Benefits for Individuals

1. Simplicity - Investors trust what they understand.

Most individual investors today don’t know what’s in their portfolios or why. The complexity of how investing works today is keeping a significant number of people out of the market. In contrast, DIs are extremely easy to understand and work with. Users can implement and managing them using the simple instructions found in this the DI User’s Manual shown at right. Holders of DIs do not need to concern themselves with market analyst, expert advice / recommendations, world events, corporate earnings or any of the hundreds of other factors that make investing so difficult to understand today. Education requirements to understand how and why DIs work are minimal. Trade decisions are made based on objective observations of price trends. It is that simple.

2. Superior Performance

Extensive testing by the NAOI shows that even the simplest DI that rotates only between a Stock Market ETFs and a Bond Market ETFs significantly outperforms virtually any MPT portfolio in all economic conditions. From 2008 to 2019 this simple DI produced an average annual return of +25.9% with a Sharpe Ratio of 1.10. During the same period, a generic 60% Stock, 40% Bond MPT portfolio returned approximately +7.4% with a Sharpe Ratio of 0.54. Note that the Sharpe Ratio is a measure of how much return is achieved for each unit of risk taken and the higher the better. You can see that the simple DI not only produced higher returns but it did so with lower risk.

3. DIs are Comprehensive Investments with a Built-In Trading Plan

DIs are the market’s first “comprehensive” investment. They not only specify the ETFs to work with but how they are to be managed on an ongoing basis. Trades are signaled at predefined intervals (e.g. quarterly) to determine if the DI should change the ETF it is holding based on the price trend of each ETF purchase “candidate” in the DI’s Dynamic ETF Pool. No human judgments are involved in the trading decision. As a result of being comprehensive, DIs can be seen as portfolio “products” and purchased off-the-shelf” from a variety of vendors.

4. Absolute Protection from Market Crashes

Protection from market crashes is critical to convincing individuals to enter the market without fear. DIs are protected from major value loss in two ways. First, they are periodically reviewed (e.g. quarterly) at which time ETFs that are trending down in price are sold and replaced with ETFs in the DI’s DEP that are trending up. Second, the value of the ETF held at any one time is protected by a Trailing Stop Loss order that will sell the ETF should its price drop by a defined amount during the short period it is held between Reviews.

5. Reducing the Human-Risk Element

Investment portfolios today are designed and managed based on human judgments. And such judgments are prone to error based on such elements as bad data, incorrect analysis, sales bias and even fraud and scams. Thus, an investor’s financial future depends on both the competence and honesty of the financial advisor they work with. We call this the “human-risk” element and it is at the root of much that is wrong with investing today. Dynamic Investments eliminate this risk element by basing all trades on objective observations of empirical data. This is a huge advance in the world of investing that makes investing more profitable and less risky.

6. Safe Investing in Risky Market Segments

The use of DIs enables individuals to invest in equities that are far too risky for inclusion in today’s buy-and-hold, MPT portfolios. DIs can be used to tame this risk by placing a volatile ETF in the DEP of a DI along with a Total Stock Market ETF and a Total Bond Market ETF. This DI will ONLY purchase the risky ETF when it is trending up in price more strongly than either Stocks or Bonds. And the DI will sell the ETF quickly should its price begin to fall. By taking the “buy-and-hold” risk out of narrowly focused equities, DIs give to investors safe access to the significant profit potential of Sector/Industry investing.

7. Dramatically Lower the Stress of Investing

Because DIs are self-managing investments that automatically signal trades based on a periodic sampling of market trends, DI investors need not worry, as they do today, when market prices drop significantly. They also don’t need to be concerned about the constant barrage of economic and world news along with expert recommendations that can cause massive amounts of stress to investors on a daily basis. Owners of DIs will know that it is constantly monitoring the market and automatically signaling trades to protect portfolio value.

8. A Viable Do-It-Yourself Option

Individual investors today are becoming increasingly concerned about their almost total dependence on financial advisors to protect and grow their savings. They see little option today but to just accept the recommendations given to them advisors/salespeople and hope for the best. The NAOI knows that many individuals would like to take more control of their financial futures. Dynamic Investments enable them to do just that. DIs are so simple to understand that individuals can easily implement and manage them on their own using an online broker if they wish. The NAOI DI User’s Manual (displayed above on this page) shows them, step-by-step how to do so. Individuals can also decide to invest a portion of their portfolio with an advisor and invest a portion of their portfolio in one or more Dynamic Investments using an online broker.

There Are More ……

The benefits for individuals of using Dynamic Investments are many and obvious. Financial advisors and organizations that offer them will have a massive competitive advantage over those that don’t. Go to this link to read why the financial services industry will benefit in many other ways.