Hello. My name is Leland Hevner. I am the President of the National Association of Online Investors (NAOI). Founded in 1997, we are a leading investor-education, investment-research and financial-consulting organization. The NAOI is unique in that we work with both investment buyers (our students) and sellers (our consulting clients) to meet the goals of each.

Welcome to an invitation-only Web page that gives a select few of my LinkedIn contacts pre-release access to a recently completed NAOI Research Report entitled “The Power of ETF Combinations”. Its cover is shown at right.

This 64-page seminal Research Report introduces to the market a new approach to investment and portfolio design that uses the unique features of ETFs, the predictive power of market/asset-class price trends and the protective power of Trailing Stop Loss Orders to create portfolios that give investors the higher returns they want along with the stronger protections from loss that they need to participate in the market with confidence and without fear.

We call this new approach Dynamic Investment Theory (DIT) and the unique investment type it creates, Dynamic Investments (DIs).

A Simpler, Safer and More Profitable Approach to Investing

The NAOI has been teaching the use of DIT methods and the DI investment type through out our extensive education network for 2+ years. Students tell us that this is the approach to investing that they need to enter the market with confidence and without fear. And they will search for advisors that offer it.

Investing professionals who have peer-reviewed DIT and DIs tell us that they know of no simpler, quicker or more effective way to gain a massive competitive advantage in a crowded market than by including DIs in their product line.

Click here to view the Research Report’s Table of Contents.

Purchase the NAOI Research Report

For a limited time the 64-page Research Report is available to you on a pre-release basis. It shows what Dynamic Investment Theory says and how Dynamic Investments are easily created for a full range of investing goals by simply combining existing ETFs in the DI format. And how they enable the creation of superior portfolios, investing strategies and investor solutions that are simply not possible today.

More Information

If you need more information before purchasing the NAOI Research Report read the content presented below on this Web page. It provides an overview of how the DIT approach to investing works, the benefits it enables that are not possible today and why it will usher in a simpler, safer and more profitable future of investing for both investment buyers and sellers.

About the NAOI

Founded in 1997, the National Association of Online Investors (NAOI.org) is the market’s premier provider of objective investing education, investment research and financial consulting. Our mission statement contains two main goals as follows:

1. To empower individuals to invest with confidence and success via comprehensive investing education, the development of innovative investment types / methods and the use of NAOI-curated online resources.

2. To consult with financial organizations, investment developers and financial advisors to show them how to create and market high-performance, low-risk investment types and portfolios that will enable them to attract far more clients than they do today.

The NAOI is unique in the financial world by working with both investment buyers and sellers to meet the goals of each.

It is important to note that the NAOI does not sell ETFs or any other investment type and we are not investment advisors. Rather, we are investing educators, investment researchers, and financial consultants. Click the button below to see a diagram of how the NAOI is uniquely structured and positioned to change how investing works today at a fundamental level and then to take this change mainstream in the financial world.

Why Change Is Needed

For over two decades the NAOI has taught individuals how to use Modern Portfolio Theory (MPT) methods and online resources to make informed and profitable investing decisions. Thousands of individuals have taken our online courses, read our books and/or attended our college classes. As a result we are a major influencer on how people invest today and the advisors they choose to work with.

As we teach our students, they teach us. And we know that far too many people who need investing income are leaving, or not entering, the market. Why? They are afraid of owning the buy-and-hold, MPT-based portfolios that they are offered in today’s highly uncertain markets. They see the risk of significant losses when markets correct or crash as being far too high. Many see annuities as a safer alternative.

At the root of this problem is the fact that MPT methods were introduced in the 1950s when equity markets and geopolitical factors were far different than they are today. While markets have evolved, MPT has barely changed at all and MPT-based portfolios are no longer optimal in today’s very hard to predict markets.

The NAOI Research and Development Project

To stem, and reverse, the current outflow of people from participating in the market, in 2022 when the value of MPT-based portfolios was decimated, the NAOI initiated an extensive R&D project to find an MPT alternative that could more effectively cope with modern markets and better meets the wants/needs of investors.

Following a multi-year effort, using extensive input from both the investing public and the financial services industry, we met our goal in the form of a new approach to portfolio design and management called Dynamic Investment Theory (DIT) and the innovative investment type it creates called Dynamic Investments (DIs). An overview of these game-changing developments is provided below of this Web page. They are discussed in far more detail in the Research Report.

Introducing Dynamic Investment Theory (DIT)

DIT finally gives the world of investing an alternative to Modern Portfolio Theory (MPT) - a portfolio design and management methodology introduced to the market in the 1950s that is no longer optimal in modern markets. The DIT approach to portfolio design uses three powerful factors, not used by MPT portfolios, that are critical for enabling investors to take full advantage of the wealth creation potential of today’s markets. The factors are as follows:

• DIT takes full advantage of the unique features of ETFs

• DIT uses the predictive power of market/asset-class price trends

• DIT uses the strong investment/portfolio value protective power of Trailing Stop Loss orders

Using these factors and others, DIT defines the logic and rules for the creation of a new investment type that we call Dynamic Investments (DIs). The Research Report devotes a full section to explaining what DIT says and how the DIs it creates can be used to design high-performance, low-risk portfolios that are not possible using MPT methods only.

Introducing Dynamic Investments (DIs)

DIT sets the logic and rules for the design of Dynamic Investments that are easily created by simply combining existing ETFs in the DI format. The Research Report shows how DIs are market-sensitive investment products capable of producing higher returns with lower risk than any ETF, mutual fund or even MPT portfolio being offered in the market today.

The diagram below shows the components of all Dynamic Investments followed by an explanation of the function of each. A DI can serve as an investor’s total portfolio or they can be used as building blocks in today’s MPT-based portfolios to their enhance returns and reduce their risk. We call DI-enhanced portfolios “Dynamic Portfolios”. They are discussed below on this page and discussed in detail in the Report.

The Dynamic Investment Configuration

All DIs have three components as shown below. They are the Dynamic ETF Pool (DEP), the DEP Review Period and the % loss of the ETF held that triggers a Trailing Stop Loss sell order. The function of each DI component is discussed below the diagram.

The Dynamic Investment (DI) Components

Presented below is a brief overview of the three DI components. Each is described in more detail in the Research Report.

• The Dynamic ETF Pool (DEP) - DIs work with groups of existing ETFs (typically from 2 to 5) selected by the DI designer, each of which thrives in different market conditions. These ETFs are placed in the DI’s DEP where they serve as the DI’s “purchase candidates”. Only one of these ETFs is owned by the DI at a time. An unlimited number of DIs can be created for a full range of investing goals based on the ETFs placed in the DEP.

• The Review Period - On a periodic basis (e.g. monthly or quarterly as selected by a designer) the DI automatically reviews each ETF in the DEP to identify the one with the strongest price uptrend. This is the ETF that the DI purchases, or retains if already owned, and holds until the next Review when the ETF selection process is repeated.

• The Trailing Stop Loss Order (TSL) - A TSL is placed on the ETF held by the DI to stop significant losses during the short time it is held between Review Events. The designer determines the TSL’s “sell” trigger - typically a 10-12% drop from the highest price the ETF reaches while being held. When a TSL sale is triggered the ETF is sold and the DI holds Cash or a Cash-Equivalent ETF until the next Review Event when, again, the strongest uptrending ETF in the DEP is purchased. In the rare case where no ETF in the DEP is trending up at a Review Event the DI holds Cash or a Cash-Equivalent ETF until the next Review.

DI designers will determine the value/content of each of these components in order to meet a full array of investing goals. The NAOI Research Report explains how. Examples of NAOI designed DIs are shown just below on this page along with the amazing returns they are capable of producing.

The NAOI Dynamic Investment Data Sheet

The NAOI has created a very simple “DI Data Sheet” that shows the values of each DI component for what can be a full product line of DIs. Presented below are examples of three DI types that the NAOI has designed and tested. Each DI shown has been shown to produce higher returns with lower risk than virtually any investment type offered today.

Just below is the Data Sheet for the simplest DI possible that we call the NAOI Core DIs. All of the information needed to create this DI is shown in this Data Sheet. The specific ETFs used by the NAOI in the ETF Pool are revealed in the Research Report. But other ETFs that track the same ETF types can work as well.

Examples of the Power of Dynamic Investments

The unique features of DIs enable investing returns that are not possible today. Following are three examples of NAOI designed DIs along with the returns they produced for the backtest period from 2008 - 2023.

The NAOI “Core DI”

The first DI created and tested by the NAOI using our “DI Design” program is described in DI Data Sheet shown below

. This very simple DI rotates only between a Total Stock Market ETF and a Long-Term Government Bond ETF for the period from 2008-2023. We call this the NAOI “Core DI”. It produces exceptional returns as shown in the Table just below and can also be used as a starting point for more advanced DIs such as the “Alpha” DI discussed next.

In the Table presented below the Core DI’s performance is compared to the returns of of a generic 60% Stock / 40% Bond, MPT-based portfolio holding the same ETFs and for the time period from 2008-2023.

At any one time the Core DI holds either the Stock ETF or the Bond ETF as determined by a quarterly sampling of the price trends of each. The generic 60/40, MPT portfolio holds both ETFs at all times with, the allocations shown, and rebalanced quarterly. The Sharpe Ratio column in the table is a measure of investment risk for the two investment types;.the higher the value, the lower the risk.

During this period the Core DI held the Stock ETF for 2195 days and the Bond ETF for 1582 days. DI trades were automatically triggered by the DI’s built-in trading system that can easily be computerized so no active management is required. Thus, this DI can be bought-and-held by investors for the long-term while it automatically make trades to capture gains and avoid, or stop, losses.

The table shows that the ultra-simple Core DI produced returns that were close to double that of a generic 60/40 MPT portfolio with lower risk. And It did so during a backtest period (2008-2023) that saw two significant market crashes and an unprecedented bull-market run.

The NAOI “Alpha DI”

The “Core DI” discussed above produced outstanding returns with lower risk than virtually any MPT portfolio for the backtest period used. However, by rotating among FOUR carefully selected and tested ETFs instead of two, another NAOI-designed DI called the “Alpha DI” delivered average annual returns of 20%+ for the period from 2008-2023 backtest period.

The “Alpha DI Data Sheet” is shown below. Again, the specific ETFs we used are revealed in the Research Report. However, virtually any ETF that follows the same indexes or matches the ETF type should produce similar results.

Click the button below to view the year by year return of the Alpha DI. This performance is impossible using MPT methods only.

An NAOI “Leveraged DI” : 3X Technology Bull ETF

DIs can be used to dramatically lower the risk of high-return, high risk ETFs. These are ETFs that are rarely found in MPT, buy-and-hold portfolios. The potential losses from holding these ETFs are simply too high for the average investor to accept. DIs however can capture the high returns of these ETFs while limiting the risk as shown in the following example.

Below is a DI Data Sheet for a rather exotic ETF available in the market that uses various techniques to capture 3 times both the gains and losses of the stock market. Thus it can produce extremely higher returns but also suffer extremely negative losses. Advisors rarely place this ETF in a buy and hold, MPT-based portfolio as the risk of significant losses is simply to high.

The DI, however, is designed to capture the gains of ETFs like this by purchasing and holding them ONLY when they are moving up in price and avoiding, or quickly selling them when they are moving down in price. The price trends of this type of ETF are detected by the periodic review of the DI and significant losses are stopped by the Trailing Stop Loss order.

The NAOI has designed a DI that works with this 3X Technology Bull ETF. Its Data Sheet is shown below. Note that we placed a 12% Trailing Stop Loss trigger on it as this is a more volatile ETF. Its performance for the period from 2008-2023 is shown below the Data Sheet..

“Experts” will claim that this level of returns with minimal risk is impossible. The NAOI Research Report show that these experts are wrong due to the following factors.

1. The DI internal trading system sold the 3X ETF if its price dropped by 12% from the highest point reached while held. It then stayed in cash or purchased a cash-equivalent ETF, such as SHY, and held it until the next review.

2. At a quarterly review if the 3X ETF lost money, the DI stayed in cash for the next quarter until the next review.

During the 15-year backtest period used in this example, the 3X DI suffered quarterly losses of 12%, 18%, 50%, 52%, 29% and 20%. But since the DI had a 12% Trailing Stop Order on the ETF held, the loss for the DI in each of these quarters was limited to 12% or less. During the same period the 3X DI captured quarterly gains such as these: 53%, 80%, 38%, 25%, 45%, 31%, 33%, 52%, 68% and 45%.

By limiting losses to a maximum of 12% per quarter and taking full advantage of the extraordinary gains list above, the 3X DI was able to produce returns that are significantly higher than is possible by simply buying and holding the 3X ETF - and it did so with far less risk.

Similar performance results can be achieved by placing virtually any volatile ETF in the NAOI “Risk Reducer DI”.

The NAOI Dynamic Investment Product Catalog

We have shown above three high-performance, low risk DI products. We have designed others that are equally as powerful for a full range of investing goals. And readers of the NAOI Research Report can do the same. Unique to these investments is that they can be viewed and marketed as “Investment Products”, each having as its goal maximizing returns and minimizing risks in the entire market or in specific sections of the market. And as is discussed above on this page their is no need to customize each to match the risk of each investor.

Because these, and other DIs, are investment products they can be market via a DI Catalog from which designers can decide which to choose to meet an investor’s investing goals and combined in DI Portfolios as discussed below. This fact opens the doors to the Holy Grail of investing - namely the Productization of Investing as is also discussed below on this page.

Introducing Dynamic Portfolios (DPorts)

The NAOI firmly believes that Dynamic Portfolios dominate the future of investing. These are portfolios that are “market-sensitive”, capable of automatically changing the ETFs they hold based on a periodic sampling of market/asset-class price trends. DPort can simply hold multiple DIs with allocations decided by the designer. Or they can hold both a DIT Segment” and an MPT Segment as discussed below.

DIT + MPT Dynamic Portfolios

While single DIs can be used as an investor’s total portfolio, the NAOI is not suggesting that they replace MPT-based portfolios. DIT and MPT methods work quite well together. The NAOI Research Report shows that by using DIs as building blocks in today’s MPT-based portfolios they become market -sensitive as well by periodically and automatically adjusting their asset allocations to capture gains and avoid losses in changing market conditions. We call DI-enhanced MPT portfolios “Dynamic Portfolios” and firmly believe that they will become the investment type-of-choice in the future of investing.

DIT/MPT Dynamic Portfolio Components

The diagram below shows an overview of the Dynamic Portfolio structure. The boxes colored in green are new to portfolio design methods used today. The chart shows that Dynamic Portfolios hold both a DIT, buy-and-sell Segment using only ETFs and an MPT buy-and-hold Segment using the investment types shown at the top of the chart. The percentage of portfolio money allocated to each Segment is at the discretion of the (DPort) designer.

The NAOI Research Report shows how to design high-performance, low-risk Dynamic Portfolios that outperform virtually any MPT-based portfolio being offered today.

Dynamic Portfolios Take Advantage of FIVE Diversity Elements

Key to the higher performance of Dynamic Portfolios is that they take advantage of FIVE diversity elements (and more are possible) while MPT portfolios use only two. The diversity elements are as follows.

Used by both the DIT and the MPT Portfolio Segment:

• Company Diversity

• Asset Class Diversity

Used only by Dynamic Portfolios Holding Both a DIT and MPT Segment:

• Management Strategy Diversity - DIT “Buy-and-Sell” and MPT “Buy-and-Hold”

• Time Diversity - Resulting from the DIT Segment’s ability to automatically change the ETF it holds based on a periodic review of market price trends

• Trade Catalyst Diversity - Subjective Human Judgments in the MPT Segment and Objective Market Observations in the DIT Segment.

The Research Report shows how these diversity elements increase enable Dynamic Portfolios to significantly and consistently outperform the MPT-only portfolios in universal use today.

A “Universal Portfolio” Configuration

The world of investing today suffers greatly from the lack of a simple, but profitable, portfolio that works for all investors regardless of their risk profile. Following the decimation of MPT portfolios in 2022, when both stocks and bonds had significant losses, the NAOI believes that generic 60% Stock/ 40% Bond MPT Portfolios are dead; we no longer teach them to our students as the only acceptable approach to portfolio design.. We are now teaching the benefits of Dynamic Portfolios holding both an MPT Segment using a buy-and-hold management strategy, and a DIT Segment using buy-and-sell strategy.. This configuration is shown in the diagram below and explained beneath it.

This very simple DPort works with only three ETFs: a Total Stock Market ETF, a Long-Tern Government Bond ETF and a Cash-Equivalent ETF. The MPT Segment holds 30% Stocks and 20% Bonds, rebalanced quarterly. The DIT Segment holds either 100% Stocks or 100% Bonds or a 100% Cash Equivalent ETF depending on the price trend of each ETF at a quarterly review. Thus, the following portfolio allocations occur automatically at a periodic review of market price trends:

• When Stocks are trending up the DPort holds 80% Stocks and 20% Bonds. (30% from the MPT Segment and 50% from the DIT Segment)

• When Stocks are trending down the DPort holds 30% Stocks and 70% Bonds.

• When both Stocks and Bonds are trending down (as they did in 2022 ) the DPort holds 30% Stocks, 20% Bonds and 50% Cash.

Thus, while the value of MPT-based portfolios in use today move up and down at the whims of the market, DPorts are capable of automatically changing asset allocations periodically to produce gains and avoid losses in all conditions.

The Universal Portfolio Performance from 2008-2023

The returns of the Universal portfolio are dependent on how much investment money is allocated to each Segment. This % is at the discretion of the designer. Here are three examples for the backtest period from 2008-2023 using different Segment allocations:

• 0% MPT, 100% DIT: + 15.6 %

• 20% MPT, 80% DIT: + 14.0 %

• 50% MPT, 50% DIT: + 11.6 %

• 80% MPT, 20% DIT: + 9.2 %

• 100% MPT, 0% DIT: + 7.6 %

Since the DIT Segment uses Trailing Stop Loss orders to sell the ETF being held if it drops from 10%-12%, at the designer’s discretion, from the highest price reached during the short time it is held, the higher the % allocated to DIT methods the less risky it is while also delivering the highest returns. The NAOI Research Report show how. The Research Report also shows the specific ETFs used by the NAOI by the NAOI Universal Portfolio.

The Fundamental Changes Coming to the World of Investing!

With a new approach and new tools the world of investing is about to change at a fundamental level. The NAOI Research Report discusses this topic in detail. Following are just a few of the benefits of the dramatic and much-needed change.

Revolutionizing the Retirement Investment Industry

The Universal Portfolio has many uses in the investing world today. One is being used as the default investment type for all retirement accounts. It is far more profitable and less risky than the outdated Target Date funds used for this purpose today. Advisors and financial organizations that offer the Universal Portfolio for IRA, 401k and other forms of retirement account will dominate this multi-billion dollar market. The NAOI Research Report shows how.

Meeting the Needs of Under-Served Investors

The Universal Portfolio can also deliver superior returns to less affluent investors who are not targeted by advisors today. Why? Because customizing and monitoring MPT, buy-and-hold portfolios takes time and effort. That’s why many advisors will not work with people having less than $100,000 or more to invest. The is the perfect investment for those with having less money to invest. No time is required to customize it and since trades are made automatically based on periodic reviews of ETF held by the DIT Segment little to no time is required to monitor it. This area of the market and the potential profits that can be realized by marketing and selling recommending the NAOI Universal Portfolio is huge. And, of course, financial organizations can use their own ETFs for the portfolios Stock and Bond ETFs. The NAOI Research Report shows how advisors can test them to at least produce returns as high as those shown above.

Enabling the “Productization of Investing”

The goal of the NAOI Universal Portfolio is to maximize returns while minimizing risk in all market conditions - bear or bull. This is a goal that works for all investors regardless of their risk profile. And since trades are are automatically made based on objective observations of ETF price trends, this portfolio and other portfolios using the same approach can be viewed as “investing products” that can be sold off-the-shelf with no customization for each investor required.

As a result, DIs and DPorts open the doors wide to the “Productization of Investing” - the Holy Grail of the financial world that experts have been seeking for decades. They haven’t found it. The NAOI has. And by doing so the world of investing changes at a fundamental level in a manner that greatly benefits both investment buyers and sellers.

Portfolio Design Science - A New Approach to Investing that CAN BE TAUGHT!

You have learned above that the DIT approach to investing uses the unique features of ETFs, the empirical observations of market price trends and the use of Trailing Stop Loss orders to create high-performance, low-risk portfolios. Thus, DIT-based portfolios can be designed using scientific methods; greatly reducing the reliance on subjective human decisions used to create and manage the MPT-based portfolios that are offered today.

Also, while MPT portfolios are designed based on a very ambiguous assessment of each investor’s risk profile, DIT portfolios are designed to maximize returns while minimizing risk in all market conditions. This is a universal goal that works for all investors so no customization for each is required. As a result the creation of high-return, low-risk portfolios can be taught in an academic environment far more successfully than the creation of MPT portfolios.

The NAOI has developed a full curriculum for a new field of study called Portfolio Design Science that shows students how to create DIT-based portfolios designed to produce high returns with low risk in all market conditions without the need to “guess” either an investor’s risk tolerance or future market movements. This MPT option will soon be taught by academic institutions that the NAOI is currently working with to train both professional investment advisors as well as student DIY investors.

There Will Be Skeptics

The NAOI is well aware that any change in the financial world as significant and potentially disruptive as the introduction of Dynamic Investment Theory, Dynamic Investments and Dynamic Portfolios will meet resistance. Click the button below to read several criticisms of this new approach by investing professionals who have peer-reviewed this new approach. Also read the NAOI’s response to each. No criticism that we have heard to-date has survived our rebuttals.

Why DIT Methods and the DI Investment Type Cannot Be Ignored

Dynamic Investments and Dynamic Portfolios are more than just a “good idea” that sounds good on paper. The NAOI has been teaching the use of this MPT alternative throughout our extensive education network for over two years with exceptional results. Students tell us that this new approach provides the higher returns they want along with the stronger protections of loss that they need to enter the market with confidence and without fear. And they will search for advisors that offer it.

The DI User’s Manual, shown at right, is the “textbook” used by the NAOI to teach our students how DIs work, how to easily create them by simply combining ETFs in the DI format and the how this new approach to investing produces significantly higher performance than the MPT-based portfolios they are offered today.

We also show students how to create and manage DIs on their own using an online broker to make the trades that DIs signal. As a result individual Do It Yourself (DIY) investing is becoming a significant competitor in the financial services industry.

But before going the DIY route, the NAOI suggests that students first look for an advisor that offers DIs and DPorts. We will give to them a list of those that do. This is a list that your organization needs to be on.

Investing professionals will soon be asked by potential clients if they offer Dynamic Investments. To answer their questions the NAOI is making the Dynamic Investment User’s Manual available to advisors via the links provided just below. You can order just the User’s Manual or both the User’s Manual and the NAOI Research Report together, at a discounted price, by clicking the second link shown below.

Click Here to Order the DI User’s Manual shown above >>

Or Click Here to Order Both the Research Report and the User’s Manual >>

The Benefits of Working with the NAOI

Readers of the NAOI Research Report will be able to create and use DIs and DPorts immediately after finishing the Report’s final Section. However, advisors and financial organizations that work with the NAOI to design optimal DIs and DPorts and bring them to the market with a highly effective marketing campaign created in conjunction with the NAOI, will benefit the most.

The types of cooperative agreements offered by the NAOI are discussed in the Research Report. A summary of these is found by clicking the button below.

Still Have Questions or Need More Information? Let’s Talk.

The NAOI’s constant interaction with the both individual and institutional investment buyers shows us that it is time for the financial world to evolve from the 1950s, when MPT was introduced, to the 21st Century. Dynamic Investment Theory and Dynamic Investments are the evolutionary change needed to enable investors to better cope with modern markets and meet the goals of both investment buyers and sellers. Financial organizations that offer the updated approach to portfolio design and management that is explained in the NAOI Research Report that is now available to you will hold a significant competitive advantage over competitors that don’t.

If you have questions about this significant change to how investing works today or simply need more information, feel free contact me at “Leland Hevner” on LinkedIn or directly at LHevner@naoi.org and let’s talk. If emailing please place NAOI REPORT in the subject line of the email.