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00:00So we're all yours. Your product lineup offers a good glimpse into many of the popular trades recently and how
00:07some have blown up, some have sort of reversed.
00:10What's your take on where you've seen flows recently?
00:12Yeah, I mean, you're spot on. You know, if you're not as familiar with Direction lineup of ETFs, we focus
00:17on short-term trading, people who are interested in the markets, people who are focused on your show, watching it
00:22like I do.
00:23So we're into the markets, and this is Direction weather. I mean, the last couple of days has been nothing
00:29but exciting.
00:30I don't know the right word to use for it, but when you have, you know, 8% moves in
00:34the COSPI index, I mean, these are historically not seen.
00:38But if you're an active trader, I mean, these are great markets for you. You can really trade the headlines
00:42right now. It's worked out great.
00:43You're seeing it in the performance of most of our ETFs. And as you said, you know, the biggest, hottest
00:48topics.
00:49So talking about precious metals, gold, oil, the moves in oil and the moves in gold miners, of course, semiconductors,
00:56the Mag7 and Korea.
00:58I mean, these have been the topics that are hitting the headlines. And it's what's moving the markets. That's what's
01:04moving the Direction ETFs.
01:05Yeah, you can see everything day to day. So I'm just wondering, in terms of today, maybe overnight, what have
01:09you seen in terms of changes?
01:11Yeah, one of the interesting things that happened with our investors is they have been, over the last two years
01:17especially, buying the dip.
01:19And it's worked really well. If you go back over the last 10 years, you've never had a better 12
01:24months than last year of every time the market was down by about 1% in the U.S.
01:29The next day's reversal was the best returns we've seen in a decade. And that's holding up this year. We're
01:34still seeing it.
01:35And so even though there's some sectors that have been somewhat out of favor, every time we see days like
01:40we just saw yesterday into the overnight hours, if you bought the dip, you've done phenomenal.
01:44And you're seeing it even this morning, right? KOSPI, I think, is up 8%. So the triple levered KORU is
01:51our ETF that's triple levered for Korea. It's doing phenomenal.
01:54So if you really are an active trader and you're really stepping into the markets, you have conviction over a
01:59short period of time.
02:00So yesterday was a very large cash flow for us. We saw a lot of money move into our ETFs.
02:05We'll probably now in our overnight markets into the U.S. market, we'll see some of the redemptions as people
02:11take profits.
02:13Talk to us about the Korea story because triple levered product on a market that's going to up 50%
02:19year to date, that just must be just...
02:22The compounding effect of all that.
02:24The compounding effect is real.
02:25Now, it can work in your favor like it has in Korea.
02:28Yeah, I mean, if you look at... I think KORU is one of, if not the best performing ETFs out
02:33there globally for the last 12 months.
02:35Depending on when you own it, you're probably up anywhere between 800 or 1,000%.
02:40That's not always going to be the case. It could go the other way, too.
02:43But when you have the trend that we've seen where you just sort of keep trending up without a lot
02:48of volatility to the downside, that tends to drive long-term performance.
02:52It's why triple levered semiconductors has done extremely well.
02:55Well, yeah, the last 30 days, 45 days, they haven't done really well.
03:00But the reality is the previous 12 months, the trend has just been in one direction.
03:05I'm curious. Sorry to interrupt.
03:06I'm just curious. On a product like Korea, for example, do you have data?
03:10How long do people actually hold that?
03:11It's interesting.
03:12So the data shows people will sell.
03:15What we can see is people are doing what they're supposed to do.
03:17They're in it for a trend, and as soon as the trend starts to falter, we'll see liquidations.
03:22So we actually saw, right, the trade has sort of come away over the last month.
03:26We saw a lot of liquidations.
03:28But then now as it's reversed again, we're seeing a lot of creations.
03:32And so it's what we want to see.
03:34We want people who, well, first of all, if you don't understand leverage, please don't use the ETFs.
03:38Come learn at our education center at direction.com.
03:41It's free. You can learn.
03:42It's not fun that way, though. I'm kidding.
03:43I was going to ask you, because some critics have called these levered ETFs gambling tools for day traders, right?
03:50How do you respond to that sort of characterization?
03:53Which, you know, look, lob in the complaints because we want to hear them.
03:56It helps us make sure we define our strategy.
03:58So if people are concerned, that means they're not educated.
04:00It means they need to come in.
04:02They're fantastic tools for traders.
04:04They need to be the type of people who are watching your show daily.
04:07If they're set it, forget it, they're not like the Emilys of the world that are watching real time, then
04:12fine.
04:13This isn't for them.
04:14They should just go into low-cost passive vehicles.
04:16If you're tuned in and they're watching you every day, these are the traders.
04:20These are the people we're focused on, and they're the people that are going to be trading.
04:23So we don't find them as gambling tools.
04:26Gambling doesn't have an economic interest, right?
04:28Gambling is, I'm betting on this thing to happen.
04:30It didn't happen.
04:30I gained or I lost money.
04:32That's not what this is.
04:33Yes, you can gain money and lose money quickly.
04:36But for those that are really invested in the markets, want to trade the headlines, that's what they're built for.
04:40They're built for short-term trading.
04:42The issue is the last 12 to 18 months, I mean, just think ever since Trump stepped into office, we've
04:48got so much volatility in the markets, and it's headline-driven.
04:51It's very rarely fundamentally driven.
04:54You'll just see these headline statements that will move the markets, and traders can take really good opportunities to step
04:59in and use some leverage to really enhance their returns.
05:03What about oil?
05:04What are you seeing there?
05:05It's been fascinating.
05:06I mean, did you expect yesterday at 120 we'd be down in the 80s?
05:09No, certainly not.
05:09Oh, my goodness, right?
05:11So, again, that's a perfect example.
05:13If you're not capable or ready for that kind of move, then don't step into leverage.
05:17Our expectation, though, is we'll probably reverse the mean again.
05:21I mean, what's really changed overnight?
05:22A statement, the war's almost over.
05:24Has the strait opened?
05:26Are we seeing shipping containers being delivered?
05:28Are we seeing all that break up?
05:30And you tell me, I'll be watching all day, but probably not.
05:33So my guess is we'll start to see a reversion back up again.
05:36And then what will happen?
05:37We'll see the next news headline that will either drive it higher or lower.
05:40So if you're plugged in and you're watching, you can make those trades.
05:44If you're not, you probably want to stay away from leverage in the oil space right now.
05:47What we did see when it came to the headlines was that the whole AI trade just got washed out
05:53in some ways.
05:54I mean, when you look at MAG7, but the U.S. side was still emerging as almost a winner compared
05:59to this part of the world.
06:00Is that how you saw it in terms of where direction was going to?
06:03It's really interesting.
06:04If we take a step back and we say, where do we think we'll be in three years, five years,
06:08ten years?
06:09Do we really believe we're going to use less data?
06:11We think we're going to use less semiconductors in our life.
06:14We think we're going to use less AI.
06:16Of course, the answer is no to all of those things.
06:18We know we're heavily invested.
06:20So to me, if you're a long-term investor, you're not necessarily trading day to day.
06:24These are great opportunities to buy into the MAG7, the AI section of the market.
06:29It's a perfect opportunity.
06:30You're not going to be upset three years from now or five years from now what day you bought.
06:34But if you're a short-term trader, maybe a piece of your portfolio, you like to trade the headlines.
06:39Well, trading around earnings has been a fantastic way to do it.
06:44Trading around expectations has been a fantastic way to do it.
06:47You get these little blip headlines about, oh, AI, do we really think it's going to end?
06:53But if you look at the earnings cycle as a long-term investor,
06:56it's been the best earnings cycle ever in that sector, ever.
07:01And so for a company to, you know, we've seen it across the MAG7,
07:05almost every single one of them, maybe Apple is the exception,
07:08saw, you know, their stocks move 6%, 8% to the downside after earnings.
07:13Why?
07:13Because they're spending more in one of the hottest growing areas of the world.
07:17Those are perfect buying opportunities for a long-term investor.
07:20Yeah.
07:20You know, just an example, you were talking about this on behind the scenes yesterday.
07:24Like a market like Korea AI, right?
07:26So Samsung is actually cheaper now than it was before the 50% rally because of the earnings story.
07:31I want to ask you about the business now because you have key markets, priorities.
07:35What are your strategies to remain popular, whether that's pricing or new thematics?
07:41Yeah, I mean, we're always working on new ETFs that are focused on the active trader.
07:46We always like to remind people we do have a few products.
07:48Like right now, the market for equal weight strategies is actually quite strong.
07:53We have a QQQ equal weight.
07:54Of course, that's interesting for long-term holders.
07:57But short-term, most of the products you'll see coming down the road are direction-like vehicles.
08:01We started to launch the Titan series.
08:04We basically took sectors.
08:05We narrowed it down to the top five names and we levered them up equal weighted.
08:09You'll see us start to step into the exciting parts of the market.
08:12People are interested in crypto.
08:13Crypto is opening up across Asia.
08:15Some of the regulators are starting to allow it.
08:17So we're stepping into that space.
08:19We continue to focus on single names.
08:21People like trading single stocks.
08:23The news is out there.
08:24It's easier to find what's going on with any particular company.
08:27So we look for the types of vehicles that people trade.
08:31So you'll start to see us continue to launch the single stock lineup.
08:34We lean in what we're good at.
08:36And that's what we're used to building tools for traders.
08:40In terms of challenges for the business, what do you see as that in the near and medium term?
08:44Is it regulations?
08:45Given the SEC has scrutinized some of these sort of leveraged products here.
08:50They're too complex for the retail side.
08:52Is it about market conditions or competition?
08:54What do you think is the near term risk for you?
08:55The regulatory environment is actually quite strong.
08:57Regulators are adopting education.
08:59We're a big focus on education.
09:01I think a great example was Korea.
09:03At the end of last year, Korea said, as a regulator, they said, if you're a Korean investor and you
09:07want to buy leverage and you've never done it before, you have to watch an educational video to get approved.
09:12We love that.
09:13We loved it so much.
09:14We actually had Heejung from our team here in Hong Kong join and help support that message.
09:19So we're actually seeing regulatory, I'll say tailwinds, regulators are allowing people to trade what they want to trade.
09:27So our focus is really on education.
09:28What I think could be a backdrop that what's out there that's concerning, I think some of the gambling markets
09:34can be concerning, right?
09:36The prediction markets.
09:37Napoleon markets of the world.
09:38Right.
09:39I mean, those are places where they're what we would call their binary events, right?
09:43For a trader, you know that term.
09:44If you're a non-trader, it means it's a zero sum.
09:46You either win or lose.
09:47So let's just think about it.
09:49If I look at the markets today and say, oh, boy, oil, it's really volatile.
09:52I step in here.
09:53Well, if I'm wrong and it moves down 20, 30 percent, I've lost 20, 30 percent.
09:58I haven't lost 100 percent.
10:00But if I do a poly market and I bet on somebody winning or losing an election or something like
10:06that, you go to zero if you're on the wrong side.
10:08That's concerning.
10:09So we want to make sure people recognize that that's gambling.
10:13Leverage trading is investing.
10:14There's a big difference in there.
10:15And so, you know, if I was going to put an item out there that I think is important, it
10:19probably would step into that realm.
10:21It might be clear to players like yourself, regulators, though, might see those two things as somewhat similar.
10:28And they tend to be more conservative.
10:30I'm wondering how you view that risk.
10:33And I think that's a good point.
10:34And as you look at the market, so NASDAQ market, as an example, basically said in an announcement, we're bringing
10:40back binary options.
10:41That's what binary options are.
10:42You can you'll go to zero overnight.
10:45So those are the things that we focus on where we want to make sure we're having that topic of
10:49conversation with an investor to say, just be, you know, take a few minutes.
10:52Learn about the investment that you're you're considering.
10:56Education is so important.
10:57It's a good example, because if you've got a binary option, you could go to zero.
11:00Whereas if you come in, get educated, you understand if look, if you're a long term investor, that's great.
11:06Stay with that.
11:07But if you love the markets and you're in your dial, then I mean, these are this is direction weather
11:11when you have eight, 10 percent moves and you can you can trade on the headlines.
11:15It's a perfect timing.
11:16Amen.
11:16Amen.
11:16Amen.
11:16Amen.
11:16Amen.
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