Why You Should Read this Presentation
The way we invest today has a short life-span. It is a process that is so complex and filled with variables that people see little option but to entrust their financial futures to advisors who are also salespeople and then to just accept advisor recommendations without question.
Recent market volatility is making this utter dependence on third parties unacceptable to many individual investors who are either investing far to conservatively or pulling out of the market altogether. The world of investing will not reach its full potential unless significant changes to portfolio design and management methods are made. This is exactly what the National Association of Investing has done with the development of Dynamic Investment Theory that you will read about on this page and those that follow in this short presentation.
I would like to introduce myself as Leland Hevner, President of the National Association of Online Investors (NAOI), an organization I founded in 1997 to empower individuals to invest with confidence through education and the use of online resources. Since its inception, thousands of individuals have taken our online courses, read our books and/or attended our college classes.
Yet, in 2008 when the stock market crashed and financial markets where in turmoil, I stopped all NAOI investor education classes. I saw that today’s standard approach for portfolio design called Modern Portfolio Theory (MPT) was incapable of either enabling investors to take full advantage of today’s market returns potential or of protecting their wealth from market downturns and crashes. i could no longer in good faith teach students a theory of investing that simply could not cope with modern, volatile markets.
The Problems with Modern Portfolio Theory (MPT)
As I began examining the MPT approach in detail I saw two major problems. The first being that MPT was introduced in 1952 when markets were a far different place. While market have evolved significantly since then, MPT had barely changed at all. The second problem I saw was that the MPT portfolio design and management process was rife with human judgments. And human judgments open the door to all manner of risk factors including sales bias, flawed analysis, bad trading decisions and all manner of investor abuse including unnecessary trades, scams and fraud. It became obvious to me that more than education was needed to empower investors; also needed was innovation. I needed to find an alternative to, or a replacement for, for MPT before I could continue NAOI education classes. With this realization, I refocused NAOI resources from education to Research and Development.
The Discovery of Dynamic Investment Theory
Following a multi-year R&D effort we met our goal with the discovery and development Dynamic Investment Theory (DIT) an approach designed specifically to work in modern, volatile markets. You will read about it on the second page of this presentation found here.
DIT sets the logic and rules for the creation of a new investment type called Dynamic Investments (DIs) that are capable of automatically changing the equities they hold based on a periodic sampling of market trends. By doing so, this market-sensitive investment type was capable of producing returns not possible using MPT portfolios and with far less risk and no active management required. You will read about DIs on the third page of this presentation found here.
A New World of Investing Possibilities
The development of DIT was completed in 2015 and the NAOI, along with our students, have been testing Dynamic Investments for the past three years. We have found the performance of this new investment type to be astounding. And we saw the the potential of DIT to change virtually all aspects of how we invest today. Once outside the MPT “box” all manner of beneficial results that are impossible using MPT are suddenly possible using DIT. Below are just a few DIT benefits that you will learn about as you move through the pages of this presentation.
Amazing Performance. Even the simplest Dynamic Investment that only rotates between a Stock ETF and a Bond ETF based on the price trend of each earned an average annual return of 25%+ during the 10 year period from 2008 to 2017 with less risk that a total bond fund.
Utter Simplicity. DIs are simple to create, requiring far less time, cost and effort than the creation of either ETFs or Mutual Funds. They simply combine existing investments in a dynamic framework.
The Productization and Systematization of Investing. DIs are comprehensive investments that not only specify the equities to work with but also how to manage them on an ongoing basis - e.g. they are essentially “portfolio products” that investors buy and hold while the DI signals trades as needed.
Objective, not Subjective Trade Decisions. Using DIs, trade decisions are made based on objective observations of historical market data that has proven predictive power; not based on subjective human judgments as they are today. By doing so, DIs eliminate a massive risk element that is the bane of how we invest today.
An Active Investment with Passive Management. The Active / Passive portfolio management debate that rages today is rendered moot by Dynamic Investments. They are active investments that are passively managed - using the best elements of each strategy.
This is just a sampling of what is possible when the fundamental way we invest is changed. Other amazing benefits are revealed in the following pages of this presentation. It is my sincere hope that you take the time to discover them by reading on.
Finding Major Competitive Advantages
In the future of investing, it is outside of the MPT “box” where major competitive advantages will be found.