Should I Invest Too? | Podcast Episode #148

0:00
Hey, everybody. This is Ryan Mallory with Swing Trading the Stock Market, and I got a good episode here to tackle with you guys today. So, we got an email from this guy named Opie and yes, that’s his Florida redneck name. Inspired by the Andy Griffith Show.

0:16
They provided me a pretty succinct question here. I don’t think this is going to be the longest podcast I’ve ever done, but nonetheless, it’s pretty much to the point and, uh, offers a good question that I don’t know if I’ve really gotten before, so I’m ready to tackle that on this show here today. Now, the bourbon of choice, and this is a new bottle like guide and I’m on a bunch of different like Facebook groups for bourbon and there’s this one group, man, it’s a bunch of degenerates, but But nonetheless, though, I mean, they, they, they pretty much like hate on every bourbon that was ever created, but they keep raving about this one called Belle Meade, and I’ve never had it before.

0:51
So I got the bottle. I got the Belle Meade Reserve bourbon small batch. It’s 108.3% proof and a 54.15% alcohol content. Let me tell you that the color on it’s great, it’s Just a real rich color to it. And the taste is really unique. I mean, it, it is just, it’s got a lot of depth to it.

1:08
I, I think this is probably in like my top 8 of favorite bourbons that I’ve tried, and maybe not everybody agrees with me, but I just think this is such an excellent pork. You can taste that corn flavor at first, and then it finishes off with a nice peppery taste, not too hot, and especially for like 108ruits. You’d think that thing would be through the roof in terms of hotness?

1:26
It’s not. It’s just got a nice subtle peppery taste to it that that it finishes off with. So it’s really good. On a scale of 0 to 10, I’d give it an 84. It’s just a really solid pour. I don’t think you’re gonna go go wrong with it. I think I only paid like $54 for it. I mean, it’s kind of high relative to some of the other ones out there, but To me, I think it was worth every dime that I spent.

1:46
It’s just a really good flavor and one that I’ll go ahead and get again sometime in the future when I finish this bottle off. So let’s get into Opie’s email here. He says, Hey, Ryan, my name is Opie. I just discovered your show a few weeks ago and I’ve been listening regularly to catch up on old episodes. Good job.

2:01
That’s one of the best things you can do is go back and listen to the old episodes because they are very rich in content. And it’s not like a, uh, news bulletin where it’s only like relevant to the day that the news happened. This is evergreen stuff. This is stuff that will be applicable 10 years from now.

2:17
And going back and listening to some of those old podcast episodes are really worth your time and effort to do so. He says, I really love the content so far, particularly how you open up to addressing listeners’ questions. And yes, if you have questions, Senator Ryan at shareplanner.com. He says in your specific focus on swing trading, since everyone else seems to be focused on day trading, which isn’t very practical for someone working full time.

2:38
I’ve been interested in a few years in the retirement accounts, but recently opened a brokerage account, not Robin Hood, to try to make some supplemental income and have a few questions. Great. So this is a guy, he’s pretty much just been a long-term investor for a long time now, he’s getting more into the swing trading, not really wanting to dive into the day trading.

2:54
Which I totally get. I’m not a day trader either. The only time that I really become a day trader is if I get stopped out the same day that I get into a stock, or I get into a stock and it goes up like 10% and I’m starting to take partial profits off the table. So he asks me two questions. I won’t get into the first one because really it’s just sort of a self-promotion thing there if, you know, about one of my services.

3:11
But the second one, he says, is about portfolio construction. It sounds like you typically have a few open swing trades at any given time. And they are all short to mid-term trades. Would it be beneficial to have some long-term investments, whether stocks or ETFs, and a portfolio to hedge against short-term losses, or would that just eat up trading capital and would be better to leave the long-term place for the retirement accounts?

3:32
Thanks a lot. I appreciate what you are doing. Now, I, I think I’m not a financial advisor, but so I can only talk to you from my own personal experiences and not. What, what you would do for your own self. But for me, I don’t like mixing, for instance, in my portfolios. I don’t want to have like one account where I’m doing long-term trading, short-term trading, mid-term trading, options trading, you know, where I just got tons of stuff going on in one account because that can kind of get it confusing.

3:47
And two, there could be times where you have a long-term position in your account that you’re expecting to do really well over the next 5 to 10 years and maybe it’s in a slump or something, but your swing trades are doing great, but those long-term trades. are really making it look like you’re not doing anything with your life.

4:14
And so long-term trades don’t need to be looked at every day, but if you have it in the same account as like a swing trade account, well then it almost like mentally messes up your outlook on your overall trading because you’re looking at your long-term positions every day where maybe you don’t have to look at your long-term positions. If I was looking to hold Apple for the next 15 to 20 years, I wouldn’t really be concerned about what Apple’s doing on a day to day basis unless they’re like declaring bankruptcy or something, and that doesn’t look like that’s gonna happen anytime soon.

4:39
So I like to keep all my accounts separate. So I like to have like a trading account, long-term account. And one of the things I’ve been trying to do a little bit more seriously is have a separate dividends account too. I’ve been trying to, there’s a lot of good dividend stocks out there and you just got to kind of look for them.

4:55
Uh, I’ve, I’ve built some of mine up in my own portfolio. There’s some of your energy stocks and you got to be careful because not all high paying dividend stocks are good dividend stocks, for instance. I mean, you can get into some and then they cut the dividends. In, in a couple of weeks because it’s just they can’t sustain that high of a dividend.

5:11
They’ve had a major pullback. There’s a change in the operations of the company. They can’t support that kind of a dividend anymore. But I really like your large cap dividend stocks that are paying, you know, somewhere around 4 or 5% or more. That’s, that’s what I look for. Like, for instance, one of the dividend stocks that are in my portfolio is AT&T and I hate AT&T.

5:31
I honestly cannot stand AT&T. I hate everything about them, their customer service, I despise. Before calling AT&T customer service, I would rather go down a slide of razor blades into a pool of alcohol before I go call customer service at AT&T. It’s literally the worst.

5:47
But nonetheless, I mean, I think when I bought into their dividend, I think their dividend was like around 8%. I’m not even sure what it is right now, but it hasn’t really done anything, but it’s a long-term position. I’m just really in it for the 8%. So I think it’s good to have separate accounts for your trading strategies because otherwise, it kind of it’s mixed up.

6:05
It’s like, it’s a potluck dinner or something like that where you just got everything blended in together. I don’t necessarily like that. I don’t want everything blended together in my accounts. I want long-term accounts. I want trading accounts. I also like to have my dividend accounts in a separate account from everything else because that’s really like a, an income generator rather than a long-term growth strategy or even a short-term growth strategy.

6:26
So all of these things have different objectives and when you start putting them all in the same account, those objectives start to get a little bit cloudy. For instance. Since on the dividend account, I don’t really need to look at that every day because those are stocks that I’m just really interested in collecting a dividend off of. God knows you can’t get it from the US Treasuries anymore.

6:43
But Opie asked an interesting question here, and he says, it sounds like you have a few open swing trades at any given time. Yeah, I mean, like right now, I think it’s 5 or 6 swing trades that I have open. Now, that can also improve to like 12 or 13 swing trades that I have open. And sometimes when it gets to that level, they’re usually just a bunch of partial positions.

7:00
Like I may have a 3. In Apple, I may have a half position in Lowe’s, I may have 2/3 of a position and Shopify and a full position and Facebook. OK, I’m just throwing random stock symbols out there. But when I get a lot of partial positions, it also opens up the door for me to open up new positions and others because there’s a chunk of change because of those partial profit-taking opportunities that I took advantage of to where I can reapply that to new positions going forward as those opportunities arise.

7:26
Speaking of opportunities too, check out swing trading in the stock market. Dot com. That’s the podcast website that connects to my Patreon account. With it, you’re going to get my market updates each and every week, actually multiple times a week. And that’s going to include the S&P 500, the Russell 2000, the NASDAQ 100, and you’re going to get updates on all the FA stocks, Facebook, Apple, Amazon, Netflix, Google, Microsoft, and Tesla.

7:50
On top of that, you’re getting my master watch lists updates each week, both bearish and bullish stocks and the daily setups each and every day that I’m watching. So check that out. I’m gonna be giving you guys intriguing charts that I find interesting or something that you can take advantage of as well.

8:06
So check that out, swingtradingthestockmarket.com. Now, one thing I would also say too is just because when you take partial positions in a trade, it doesn’t mean that you need to go ahead and immediately reapply that capital to another trade. You don’t have to do that at all. In fact, your trades are best taken when it becomes necessary and obvious when these trade setups present themselves to you.

8:24
Don’t go thinking that, OK, I’ve got $1000 that I just took profits on. I need to put this money somewhere else now. No, just leave it in cash until the opportunity presents itself. So often we’re like, hey, just freed up $1000 or $500 or $10,000. I need to put this on. You don’t have to put something on anything. You just leave it in cash until the right opportunity arises.

8:42
I’m, I’m always sitting on some amount of cash. Very rarely do I ever max myself out and trade. I mean, it’s got to be an incredible hot streak that I’m on in order to max out my entire portfolio. Otherwise, like what the reader says, I usually have like 5 or 6 positions in my portfolio and I’m constantly managing those positions, adding new ones, taking partial profits and others.

9:01
Maybe I get stopped out in another. But for the purpose of this podcast, I focus primarily on swing trading. And you don’t usually see me do too many episodes where I’m talking about long-term investing and dividend stocks, and so forth. But I think what he talks about in this email is important because he talks about time frame and time frames are important because it actually provides like another layer of diversification.

9:21
You know, short-term profits, you’re looking for profits somewhere in the next 1 to 2 months, sometimes in the next couple of days or weeks, depending on how the stock reacts. Well, long term, this is really like your long term. I believe in this kind of stock. The fundamentals are solid. They got a niche that they don’t. a lot of competitors in or whatever.

9:37
And so you create like a separate account for these long-term investments that you really don’t have to manage on a day to day basis. You keep track of them, you like to see what they’re doing, but you’re not having to log into the account every day and, and raise the stop loss or whatever. That’s why I like to keep those in a separate account.

9:53
But they also provide you a different layer of diversification in the sense that we think a lot of times about diversification is being like, OK, a portion in tech, a portion in utilities, a portion in staples, a portion discretionary. Portion and energy, but really, you can have diversification across time frames too, to where you have a long-term account, you have some dividend accounts.

10:10
I mean, for instance, and this isn’t even related to stocks, but you can get rental homes, right? I mean, you can get a rental home. You have a house that you’re, you’re living at. I’m living in a house right now that eventually I’m gonna rent out. For so much of my life, I’ve basically just focused on, on trading, on SharePlanner, doing the podcast and everything.

10:26
I’m kind of ready to get into a new house, but I’m gonna probably re-rent this current house that I’m sitting in, you know, because it provides a good value. And so all those things, what are they? you’re kind of diversifying, not just against like different asset classes or different stocks, but you’re also diversifying across time frames and you’re also across time frames in the way that you earn the income.

10:47
Dividend income is totally different than trading income, totally different. So I don’t see uh a long term investment account like OP asked here in this email. I don’t see an investment account as a hedge against your trading account. I really just see it as more of like a diversification, and that’s OK. I’m always going to be a much better trader than I am a long-term investor or a person who identifies really good dividend stocks.

11:10
That’s not my, that’s not my niche. That’s not anything that’s ever going to be. I can get better at it over time, but I really feel like trading is my, my go to. So most of my capital is in trading and most of my focus is on trading. And when I get into like a long-term stock, it’s usually because The stock market has pulled back dramatically, like extremely big time, right?

11:32
Kind of like what we saw in 2018, what we saw in 2009, 2020 with the pandemic. And you’re looking at opportunities to buy stocks at unbelievable value to where, OK, maybe it drops a little bit more and I’m talking about long term here, not, not trading.

11:48
Trading is a whole other set or strategy, but I’m looking at it from the long term here. And I’m always looking at the large cap stocks when there’s major market downturns because those are the ones that are most likely to recover. Those are the ones that are going to probably do the best on the way back up because they’re the ones that are more reliable.

12:05
They’re the ones that have more capital to work with. They’re the ones that have more security. Your small caps, there’s a good chance that some of those will not make it out alive, just like what we saw on the NASDAQ.com bubble. But the large gaps, especially like the Fang stocks, Apple. I mean, you get a 30% pullback.

12:20
I mean, you got to buy that. You get any kind of a pullback like in Microsoft. I mean, that thing’s been around since the ice age. So, those are the ones that I really like to buy on major, major pullbacks and then keep them in my portfolio long term. And that’s the same with the dividend stocks too. I’m not adding dividend stocks all the time.

12:36
I’m not adding long-term. Stocks all the time either. Very rarely do I do that actually. Usually, it’s coming off of a massive downturn where the dividend yields are a lot higher in some of these individual plays and I don’t really think that there’s a good chance that they’re going to cut their dividend. So I go ahead and buy it, and taking advantage of a market fluctuation.

12:53
And as, as far as this question about is it better to have it in stocks or ETFs, I, I think it’s good, you know, if you’re going to chase after. The hot sectors, and that’s more like your swing trading, right? Because one sector can be hot for another month and it can be a total dog the next month. It’s very difficult to determine which sectors are gonna be hot over the course of the next 1015 years if you’re looking at it from a long-term perspective.

13:14
However, if I’m looking to get into an ETF, I’m probably going to add some in the spy, the QQQ. I’m not getting into ultras. Maybe it’s a little bit of Russell, but not too much. But there’s also some very like specific ETF plays that you can focus on. Like if you think cybersecurity is going to be big over the next 10 years, then maybe you buy an ETF in that or cannabis, like MJ.

13:35
Then you buy MJ. If you think there’s like a specific sector that’s gonna be big, then yeah, capitalize on that, take advantage of it. But in terms of like just sectors because it’s, there’s only 11 sectors out there, right? I mean, there’s a good chance you’re gonna see a lot of rotation in and out over the course of like a 10 or 15 year period. But to wrap this up, Yes, it’s good to have your different trading strategies and different portfolios.

13:55
You don’t want your swing trades mixed up with your day trades, and you don’t want your swing trades mixed up with your long-term accounts and you don’t want your long-term accounts mixed up with your dividends. They should be all separate. And it’s nice now, like I go on Thinkorswim and I can link all of my accounts to the software and then I can.

14:11
Basically go down through a drop-down menu and just select which account I want to look at. So it’s, it’s really easy. It’s not as hard as it seems. And having multiple time frames for your trades, there’s also a different layer of diversification that a lot of people don’t consider. I’m always gonna be a trader. I’m always gonna be a swing trader primarily.

14:28
That’s where I’m gonna do my best at. But it doesn’t mean that I completely ignore. Some long-term opportunities if they become very obvious to me following a huge market pullback. Right now, no way I’m gonna buy anything for the long term. Everything’s so overinflated. There’s absolutely no way. If the market pulled back 1520, maybe 30%, yeah, I would, definitely.

14:46
And that’s gonna do it for today. If you have any questions, please make sure to send them to me, ryan@shareplanner.com. If there is any way possible, I will put it on the show for you guys. So, make sure to keep sending those emails to me. And if you could do me the pleasure of leaving a good review on whatever platform that you’re listening to this on, if it’s Apple, make sure to leave a, a, a review.

15:07
I mean, I know it takes a little bit of time, but it really does mean the world to me and continuing to produce these podcast episodes for you multiple times each week. So take care, do that for me, and God bless you all.