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The ‘Magnificent Seven’ and the Rise of Self-Directed Investing

A Q&A with Greg Boland Chief Strategy Officer, Tiger Brokers.

Tuesday, November 28th 2023, 10:17AM

Can you tell us a bit about your early career and how you got into financial services?

My route to this sector was somewhat indirect in that I started out as an economics teacher in Auckland, having done a BA in history at the University of Auckland. I left teaching in 1988 and aimed straight for financial markets, especially futures and options, which have always fascinated me. I was first the Education Manager of the New Zealand Futures & Options Exchange before becoming its General Manager in 1996, and then worked at the Sydney Futures Exchange to get a direct perspective on the Australian markets.

At this point I have specialised in capital markets for more than 35 years and worked in nearly every area, from exchange management to investment advisory management, surveillance and risk and compliance, operations, and governance. What has intrigued me in recent years are trading systems and methodologies, including online, exchange-traded equities and derivatives, equity options, index futures and options, and financial futures. Whether you want to work in the sector or simply invest, nothing is ever static and the learning curve is extraordinary, especially as the intersection between finance and tech has broadened and deepened in the 21st century.

What is Tiger Brokers NZ and what attracted you to the company?

Tiger Brokers is a NASDAQ-listed global company which was established in 2014. We’re an online brokerage firm that operates the Tiger Trade share trading platform providing people with access to the world’s stock markets. I joined in 2021 because the opportunity to be part of a dynamic company offering information and services to self-directed investors appealed to me. As Chief Strategy Officer I focus on accessing stock exchanges for investors, and on developing resources and educational tools for Kiwi who want to increase their knowledge and grow their wealth through self-directed investing.

I like the company’s focus on education. New products and vehicles emerge all the time – such as share trading apps, like that of Tiger Brokers’ Tiger Trade platform – that allow people to self-direct their investing. However, you cannot be a responsible provider if you are not setting people up to succeed by giving them the tools to learn about the services and understand their own risk appetite. You have to help people marry the degree of risk they are taking with the objectives they have for their investment activity.

One of my favourite elements of my job is leading the regular seminars we hold for investors and would-be investors because it’s highly current and interactive – you can correct misconceptions and make sure people are fully cognisant of everything new that is happening in the market and what it means for them. Investing is not a space where you want to just learn by doing, so we work hard to help protect people from avoidable mistakes, whichever platform or tool they might be using. As such we are unique in New Zealand, as we offer a demo (or paper) account where clients can learn how to use Tiger Trade and how markets work before investing.

Why do you think there has been a rise in interest in self-directed investing in New Zealand? And do you think individual investors are still actively participating in the market despite increasing uncertainties?

Yes, investors are still relatively active in this space despite the global economic headwinds. I attribute this rise in interest, and persistent engagement, in self-directed investing to a few factors: a younger generation of digital natives, who have access to trading apps with low fees, are now able to trade stock as easily as posting on social media. Lockdowns during the pandemic, coupled with rising living costs and property prices, may have also made individuals seek alternative income sources.

Traditionally, Wall Street has often characterized retail investors as unsophisticated and prone to making hasty investment decisions. But if we look back at what happened in 2020, it's clear that retail investors can make a big impact, even in an industry that's seen as favoring the super-rich. Many of these individual investors do a lot of research and share their unique perspectives on market trends through social media to foster open discussions.

Market uncertainties can prompt people to temporarily withdraw from the market. Nonetheless, with continued education and improved understanding of financial markets, individual investors can increasingly utilize products such as stocks as an additional means for diversifying their asset portfolios in the long term.

Circling back to your experience in futures and options – you were an NZX derivatives advisor for many years. What do you think draws global investors to futures and options today?

Derivatives aren’t for all investors but may be for those who have the knowledge and confidence to embrace riskier but potentially more profitable trading strategies. The vehicle of choice for many is stock options trading on United States markets, and more savvy or advanced traders are turning to futures. Both are more complex and riskier than stocks due to higher leverage but can be rewarding if invested in correctly.

In my view there are several likely factors behind the increased interest in derivatives. With them, investors can lock in future prices, keeping price shocks at bay. Given leverage, they mean investors can potentially profit from smaller investments – but leverage is a double-edged sword. But as with any asset class, providers have a responsibility to lay out the facts, so investors make choices that align with their objectives and appetite for risk.

There are a lot of share trading apps in the market now. What is it that sets Tiger Trade apart – why do you think your customers are choosing it?

Our customers tend to be internationally focused in terms of their investment mindset. They are interested in Australia and the United States and they want access to the high-value, high-profile stocks – the so-called ‘Magnificent Seven’, which includes the Apples and Amazons – as well as emerging companies in the tech sector and other sectors where the investor may have specialist knowledge or interest. Offshore financial markets offer many opportunities, and we are highly motivated to open those doors for customers while ensuring they have access to the knowledge they need.

I think people are also drawn to our innovation. We have the demo account, an investor community where people share ideas and an AI-powered chatbot TigerGPT, which is available to users in Australia and Singapore as well as New Zealand. Its features allow investors to research stocks, summarise key insights from earnings calls and releases, and extract pertinent company news and sentiment analysis based on the nature of the questions asked, all within seconds. They can access TigerGPT through the Tiger Trade app, so everything is in one place.

The world is in a phase of high risk, high inflation, and low growth. What will happen next, in your view?

These factors combined with the wars in Russia-Ukraine and the Middle East signal further price fluctuations in energy and the global supply chain, and likely further contractions to spending. With most central banks at or the near peak of their interest rate hiking cycle, as inflation flattens, we expect investors to again turn to equities, albeit there is still a bearish tone to markets. Interestingly, according to a Vanguard study, millennials are better savers than boomers, so they may be better positioned to tighten their belts in response to rising prices and market uncertainty.

In our industry, it is important to keep returning to education as a key pillar in times of uncertainty. When there is as much volatility as we are seeing at the moment, investors need to hew even closer to their own risk tolerance level, not take uninformed leaps of faith, and remind themselves of their long-term investment objectives.

Investing carries risk. This is not financial advice and should not be regarded as a solicitation or recommendation of acquiring or disposing of financial products. Any content being discussed, shared, and commented on does not consider your own investment objectives or financial needs. Please read our Disclosure Statements and Terms and Conditions available on our website, and consider whether acquiring or continuing to hold financial products is suitable for you before opening an account or making investment decisions.

Tags: Tiger

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