Hello. My name is Leland Hevner. I am the President of the National Association of Online Investors (NAOI). Founded in 1997, we are a market 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 you to an invitation-only Web page that gives a select group 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.

Written based on a multi-year R&D project by the NAOI, using extensive input from both the investing public and investing professionals, this seminal report introduces an updated approach to investing that more effectively copes with modern markets and better meets the wants/needs of investors than the MPT-based portfolios they are being offered to investors today.

The 64-page Research Report describes an innovative approach to portfolio design and management called Dynamic Investment Theory (DIT). DIT sets the logic and rules for the creation of a simple but powerful new investment vehicle called Dynamic Investments (DIs). DIs automatically change the ETF they hold based on a periodic (e.g. quarterly) sampling of asset/market price trends.

By being “market-sensitive”, extensive testing shows that DIs produce returns that are consistently and substantially higher than virtually any standalone ETF or mutual fund being offered today.

Plus, when added as building blocks to today’s MPT portfolios, DIs make them market-sensitive as well by automatically changing their asset allocations to capture gains and avoid losses in all market conditions - bear and bull.

Order Your “Pre-Release” Copy of the NAOI Research Report Today

Click the button just below to go to a page where you can purchase the NAOI Research Report. Or, for more information, continue reading the content beneath the purchase button to learn how the world of investing is about to change at a fundamental level and how both investment buyers and sellers can take full advantage of this change immediately after reading the Report.

The information presented below provides an overview of the content of the NAOI Research Report and shows why and how those who read the Report will hold a significant competitive advantage in the future of investing.

It must also be made clear at this point that the NAOI does not create or sell ETFs or any other investment type. We are educators, researchers and consultants who work with ETF developers, investment advisors and both individual and institutional investors to meet the goals of each.

About the NAOI

The National Association of Online Investors (NAOI) was founded in 1997 with two main goals in our mission statement. They are:

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

2. To enable financial organizations, developers and advisors to gain a competitive advantage by creating superior investing portfolios and total investing solutions that will attract far more clients than those they offer today.

Since our founding, thousands of individuals have taken our online courses, read our books/articles and/or attended our college classes. As a result, we have an unmatched knowledge of what individuals want and need to enter the market with confidence and without fear. This is information that we use to create content for our investor education courses. We also share this valuable knowledge with our consulting clients to enhance their product development and wealth solution strategies.

Click the button below to see a diagram of how the NAOI is uniquely positioned to usher in a simpler, safer and more profitable future of investing.

Why a Fundamental Change to Investing Is Needed

As the NAOI teaches our students, they also teach us. As a result we know that far too many people who need investing income today are leaving, or not entering, the market. Why? Because they are afraid of owning the buy-and-hold portfolios recommended to them by advisors in modern volatile markets. They view the risk of significant losses when markets crash (an event that happens on an average of every 6-7 years) as being just too great. Many see purchasing annuities as a safer option for growing, and protecting, their savings.

At the root of this issue is the market’s exclusive and unquestioned use of Modern Portfolio Theory (MPT) to design and manage portfolios. The MPT approach was introduced in the 1950s when markets were a far different place. While markets have evolved significantly since then, MPT has barely changed at all and the buy-and-hold portfolios it creates neither enable investors to take full advantage of market gains nor to protect their portfolio value from significant losses.

Click the button below to review just a few of the reasons why the exclusive use of MPT-based portfolios today is causing more and more people to leave the market, or not enter the market, in droves.

The Change Needed: A Market-Sensitive Investment Type and a Dynamic Portfolio Component

To enable individuals to enter the market today with confidence and without fear the NAOI initiated an R&D project to find an updated portfolio design and methodology that would more effectively cope with modern markets and better meet the wants/needs of today’s investors than the industry standard MPT-based portfolios in universal use today.

Following a multi-year effort, using extensive input from both the investing public and the financial services industry, the NAOI developed the change needed in the form of a new approach to portfolio design and management called Dynamic Investment Theory (DIT) and a new ETF-based investment vehicle that DIT creates called Dynamic Investments (DIs).

DIs work with combinations of existing ETFs, each of which thrives in different market conditions. On a periodic basis (e.g. quarterly or monthly) the DI reviews these ETFs and buys, or retains, only the one ETF having the strongest price uptrend. It is then held until the next review when the selection process is repeated.

By being “market-sensitive” DIs consistently produce higher returns with lower risk – in all market conditions – than any standalone ETF or mutual fund being offered today with no active management required. And when used as building blocks in MPT-based portfolios DIs automatically adjust allocations to take advantage of current market trends as discussed below on this page and in greater detail in the Research Report.

The Amazing Benefits of Using Dynamic Investments

Dynamic Investments (DIs) are not simply another investment type like mutual funds or ETFs. DIs are designed using an entirely different approach to investing called Dynamic Investment Theory (DIT). This is an MPT-alternative that makes trades based on the proven predictive power of market price trends instead of the subjective human judgments use for this purpose today. The benefits of this approach are many and significant as discussed below on this page.

But the NAOI is not suggesting that DIT replace MPT; they work quite well together in a new portfolio type that we call Dynamic Portfolios (DPorts). DPorts are divided into two segments - one using MPT buy-and-hold methods and one using DIT buy-and-sell methods. By using both approaches, Dynamic Portfolios take advantage of FIVE elements of diversification and more are possible. MPT uses only two.

In addition to adding at least three additional diversification elements to portfolios (as discussed in the Report) DIs enable the following benefits that are not possible today:

• Higher returns without higher risk - MPT says this is not possible; DIT shows that it is possible

• Absolute protection from significant losses in all market conditions - MPT has no equivalent safety net

• Enabling the creation of a “Universal Portfolio” that works for all investors regardless of their risk profile - this is the perfect “default investment” for the multi-billion dollar retirement market.

• Enabling the “Productization of Investing”, the Holy Grail of the investing world that the financial world have been seeking for decades. They haven’t found it. The NAOI has and it changes everything.

• Uncovering massive value currently lying dormant in ETF product lines by “productizing” and thus “monetizing” combinations of existing ETFs.

• Laying the foundation for a new approach to investing called “Portfolio Design Science” that will soon be taught throughout academia and the investing world.

To learn more about these benefits and to view others click the button below.

The Power of Dynamic Investments (DIs)

To illustrate the returns potential of Dynamic Investments, the table below shows the performance of a very simple DI designed by the NAOI that rotates only between a Total Stock Market ETF and a carefully selected Long-Term Government Bond ETF for the period from 2008-2022. We call this the “Simple DI”. In the table its performance is compared to the returns of each standalone ETF used by the DI as well as to the returns of a generic 60% Stock / 40% Bond, MPT-based portfolio holding the same ETFs.

At any one time the Simple 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 - the higher the better.

During this period the Simple DI held the Stock ETF for 2195 days and the Bond ETF for 1582 days. DI trades were automatically signaled by the DI’s built-in trading system that can easily be automated 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 take advantage of changing market conditions.

You can see that this simplest possible DI produced returns that were close to double that of the generic MPT portfolio and with lower risk. And It did so during a backtest period (2008-2022) that saw two significant market crashes and an unprecedented bull-market run.

The “Alpha” Dynamic Investment: 20%+ Annual Returns from 2008-2022

The “Simple DI” discussed above produced outstanding returns with lower risk. However, by rotating among FOUR ETFs, instead of two, another NAOI-designed DI called the “Alpha DI” delivered even higher performance for the 2008-2022 backtest period. Click the button below to view its yearly returns and average annual return for this period. The higher returns by adding 2 ETF purchase candidates to the Simple DI are amazing.

Readers of the NAOI Research Report will learn how the Alpha DI was created, how it is managed and the specific ETFs it uses. This is only one example of a high-performance DI design. The Research Report gives readers the knowledge and tools needed to design an unlimited number of others for a full range of investing goals.

Uncovering Massive Value Currently Lying Dormant In Existing ETF Product Lines

In the above examples you can see that powerful ETF-based investment products were created by simply combining existing ETFs in the DI format. And there are an unlimited number of other powerful DIs that can be created for a full spectrum of investing goals.

By “productizing” - and thus “monetizing” - combinations of existing ETFs, DIs significantly expand the size, scope and value of current ETF product lines without the need to create a single new ETF. This is value that is currently lying dormant in existing ETF product lines. The NAOI Research Report shows readers, step-by-step, how to take advantage of this massive benefit immediately.

The Power of Dynamic Portfolios (DPorts)

As mentioned above, while a single DI can be used as a total portfolio, the NAOI is not advocating that DIs replace MPT portfolios. They work quite well together. When used as building blocks in MPT portfolios, DIs make them market-sensitive and, by doing so, both reduce their risk and boost their returns in all market conditions. We call DI-enhanced MPT portfolios Dynamic Portfolios (DPorts).

A DI-Enhanced MPT Portfolio Configuration

The diagram presented below shows an example of how a DI building-block can be used to boost the performance of an MPT-based portfolio The DI could be the “Simple DI” or the “Alpha DI”, both discussed above on this page, or another created by portfolio designers who have learned how to do so by reading the NAOI Research Report.

The DI building block(s) makes the MPT portfolio “dynamic” and both enhance its returns while lowering its risk. The degree to which it does so is dependent on the portfolio designer’s allocation of money to the DI(s).

Using DIs as MPT-portfolio building-blocks is a simple way for advisors and portfolio designers to take advantage of DI benefits immediately, without significant disruption to current activities.

A New “Universal Portfolio” Configuration - The 30/20/50 Portfolio

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.

The NAOI believes that today’s generic 60% Stock/ 40% Bond MPT Portfolio is dead; the NAOI no longer teaches it to our students. In its place, we are now teaching a 30% Stocks / 20% Bond / 50% Dynamic Investment configuration as shown in the diagram below. It holds both a Modern Portfolio Theory (MPT) Segment, using a buy-and-hold strategy, and a Dynamic Investment Theory (DIT) Segment, using a buy-and-sell management strategy.

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 at all times, rebalanced quarterly. The DIT Segment holds either 100% Stocks or 100% Bonds or a 100% Cash Equivalent ETF at all times depending on the price trend of each. Thus, the following portfolio allocations occur automatically at a periodic review:

• When Stocks are trending up the DPort holds 80% Stocks and 20% Bonds.

• 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 when MPT portfolios were decimated) the DPort holds 30% Stocks, 20% Bonds and 50% Cash.

From 2008 - 2022 this DPort earned an average annual return of +11.95% while a generic 60/40 MPT portfolio produced an average annual return of +8.3%. And it did so with significantly stronger protection from significant losses. The NAOI Research Report shows how this simple “Universal Portfolio” is designed and why it will soon become the investment type of choice for both buyers and sellers.

As just one example of its use, this is the perfect 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 this portfolio will dominate the multi-billion dollar retirement market. The Research Report shows how.

The Effects of Segment Allocations

While the DPort configuration shown above meets the needs of most investors, its performance can be changed by simply adjusting the allocation of money to each Segment. The table below shows how increasing the allocation of portfolio money to the DIT segment increases returns.

It is important to note that the DIT segment of this portfolio is absolutely protected from market crashes via the use of a Trailing Stop Loss order placed on the ETF being held. This benefit, by itself, if properly marketed, will enable advisors to attract far more clients than they do today.

The Productization of Investing

As can be seen from the above examples, DIs and DPorts are designed with the goal of maximizing returns while minimizing risk in all market conditions. This is a goal that works for all investors, regardless of their risk profile. As a result DIs do not require customization for each investor. Thus, they can be viewed and used as “investing products” that can be sold off-the-shelf to the investing public. This enables the “productization of investing” - the Holy Grail of the financial world that financial experts have been seeking for. decades. They haven’t found it, the NAOI has. And this changes everything in the world of investing. The NAOI Research Report shows massive the benefits of this evolutionary development.

The Investment Product-Line of the Future

With the introduction of DIs and DPorts the investment product-line of the future opens a vast new world of investing research and enables the creation of superior investment products, investing strategies and wealth-creation solutions that are not possible today. Advisors that offer them will hold a massive advantage over competitors who remain stuck in the 1950s-era,”MPT Box”.

The diagram below shows the expanded components of the “The Investment Product-Line of the Future”. Click the button below it to see an explanation of each. With this new set of “investing tools” a vast and virgin world of investing research and superior products opens its doors. This is a world in which even a basic concept such as how investment-risk is measured today will be questioned and replaced.

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 along with our response to each. No criticism that we have heard to-date has survived close scrutiny.

Demand for Dynamic Investments and Portfolios Is Growing Fast

Dynamic Investments and Dynamic Portfolios are more than just a “good idea”. The NAOI has been teaching their use throughout our extensive education network for over two years and demand for this new approach is growing fast.

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 and the benefits of including them in their portfolios. We also show students how to create and manage DIs on their own, without an advisor, by using an online broker to make the trades that DIs signal. But the NAOI suggests that students first look for an advisor that offers DIs and DPorts. We will provide them with a list of those that do.

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 shown at right 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 at right>>

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 first with a highly effective marketing campaign created with input from 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 investing world to evolve from the 1950s, when MPT was introduced, to the 21st Century. Dynamic Investment Theory is the evolutionary change needed. And financial organizations that offer this updated approach to investing first will benefit the most.

If you are skeptical of this new approach, have questions about it or simply need more information, feel free contact “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.