On this page I discuss why fundamental change to how we invest today is needed for the financial services industry to meet the needs of the investing public. To go directly to a page that begins the explanation of what this change looks like go to this link: Dynamic Investment Theory.

The Need for Change

As President of the National Association of Online Investors I, Leland Hevner, interact with the investing public on a daily basis and have done so for over 20 years. The input that I am getting from average people with money to invest tells me that the way investing works today is not meeting their needs. They are told by advisors to buy portfolios, based on an a methodology called Modern Portfolio Theory (MPT), that match their risk profile and then to just hold them for the long term with perhaps an occasional rebalancing.

As a result, these portfolios have no market sensitivity and are dangerously vulnerable to market crashes. In 2008-2009 many investors lost 30%, 40% and more of their portfolio value when the stock market crashed. Yet following the crash they were given the same dangerous, static portfolios recommended to them prior to 2008. And in the first quarter of 2020, as these words are written, investors are watching their MPT portfolio values being destroyed again as the Corona Virus decimates markets.

People are Leaving the Market in Significant Numbers

Individuals with money to invest tell me that they are losing faith in their financial advisors who continue to recommend MPT-based portfolios that they know will crash at regular intervals in the future (about every six years on average according to historical data).

A significant portion of the investing public are no longer willing to subject their financial futures to the risks inherent in owning static MPT portfolios in today’s dynamic markets. I am seeing people leaving the market in droves and potential new investors avoiding the market altogether. They tell me that they will not return to the market until an alternative approach to MPT for portfolio design and management is offered to them.

The Financial Services Industry Must Evolve

Investor distrust and dissatisfaction with current investing methods is a growing problem that the financial services industry needs to recognize and respond to in order to retain existing clients and to attract new ones. Investors must be offered an alternative approach to MPT that is designed to both grow the value of portfolios AND to provide absolute protection from market crashes.

In other words, the world of investing must evolve to cope with modern market volatility and to better meet the wants and needs of individual investors. Organizations that do so will thrive. Those that don’t will struggle to survive. That’s just how evolution works.

The NAOI Solution: DIT and DIs

Fortunately the NAOI has developed the innovative approach to portfolio design and management that the investing public wants and needs to enter the market with confidence and without fear. Created based on a multi-year R&D effort using investor input and scientific methods, the new approach is called Dynamic Investment Theory (DIT). DIT creates an innovative investment type called Dynamic Investments (DIs) that are capable of changing the equities they hold based on a periodic sampling of equity market trends.

DIs are market-sensitive, purchasing only equities that are trending up in price and avoiding, or selling quickly if already owned, those that are trending down. By doing so, extensive testing by the NAOI has shown that Dynamic Investments are capable of producing returns that static, MPT portfolios can’t touch, in all economic conditions, and with lower risk and no active management involved.

Dynamic Investing is described in this section of the NAOI Web site starting at this link, and in more detail in our recently released book, shown below, entitled “An Introduction to Dynamic Investment Theory ” that can be purchased in the NAOI Store.

Creating Awareness and Demand

The NAOI is currently teaching the use of Dynamic Investments to the public in our extensive education networks that reach thousands of individual investors. And we will be publishing a “DI Users Guide”, shown below, that will be available on Amazon and other platforms that can reach millions. This will create both awareness of this new approach and demand (see “The NAOI Advantage”.)

Financial organizations that include DIs in their product offerings will meet this demand and capture a significant new client base and be in a position to shape the future of investing. Those that don’t will need to explain why to the investing public.

NAOI Support

The discovery of DIT and DIs is the result of a multi-year R&D project initiated by the NAOI in 2010 following the financial crisis market crash. What we have found and developed is discussed briefly on this site and in more detail in the Introduction to Dynamic Investment Theory book mentioned above. But to fully realize the enormous potential of this fundamental change in investing, advisors and financial organizations will need to take advantage of NAOI support products as discussed at this link.

The introduction of Dynamic Investments is a once-in-a-generation change in the field of investing. And those who recognize this first, and aggressively take advantage of it, will benefit the most. The NAOI stands ready to assist you in taking full advantage of this new approach to investing. Learning More This area of the Web site provides a brief overview of Dynamic Investment Theory and Dynamic Investments. To begin your exploration of this new approach we suggest that you next go to this link that discusses Dynamic Investment Theory. Then continue down the Dynamic Investment navigation submenu to learn more.

Learning More

This area of the Web site provides a brief overview of Dynamic Investment Theory and Dynamic Investments. To begin your exploration of this new approach we suggest that you next go to this link that discussed Dynamic Investment Theory. Then continue down the Dynamic Investment navigation submenu to learn more.