Buying IPO’s: Coinbase | Podcast Episode #164

0:07
Hey, I’m Ryan Mallory and this is my Swing Trading the Stock Market podcast. I’m here to teach you how to trade in a complex ever-changing, world of Finance, learn what it means to trade, profitably and consistently managing risk, avoiding the pitfalls of trading. And most importantly, to let those winners run wild, you can succeed at the stock market and I’m ready to show you how, hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market, we have a Big, big IPO coming out on Wednesday, April 14th.

0:38
And that’s the coinbase IPO people want to know, hey, Ryan, what’s the coinbase IPO? Price prediction. Where is coinbase going? Should I buy coinbase? Now look initial public offerings. Particularly very hyped ones, you had snow, you had PLT are you’ve had Roblox Bumble.

0:57
You’ve had tons of them over the past year, tons of them. And there’s, there’s always like a Common Thread between some of the biggest ones. We And that is they usually don’t do as good as what everybody expects them to do. There’s so much hype going into them and a lot of that’s just your Banks and the people who are who actually got in at the IPO price, they’re the ones that are trying to drum up the support for it and that’s not the time that you want to be buying into the stock for the first time.

1:26
Learn if anything in your trade, avoid the IPOs. There is no need to rush into an IPL. It’s not going from zero to a million dollars a share. On the first day, you’re not going to miss out if you don’t get on the first day. That’s just a matter of fact, you take a look at Facebook.

1:42
It I peeled back in the 40s years ago and what to do. It dropped all the way down to 17. It traded lower for months before finally found, its footing interest started trading higher. Now, you have a stock that’s trading at over, $300, a share. It didn’t do that. Right out of the gate and none of these stocks will what you will usually find with these IPOs?

2:02
Is that the stock usually struggles? For the first three to six months, you have about a 36 month waiting period before you really need to get in to the stock. But I mean, think about all of these IPOs that we’ve had so far this year, everybody’s talking about. This is the one to get into. This is the one you got to trade.

2:19
I gotta get into Pinterest, I gotta get an Etsy, I got to get into Twitter, some of those were a while back, but nonetheless, every time we get one of these, well hyped IPOs, that people are familiar with people, go nuts about it and all you’re doing when you’re trading, these things is following the crowd.

2:35
I’ve never Bought a single IPO not on the first day. I haven’t never, I mean bought one on the second day. I’m going to give it time and I’m going to let it settle down and find its base before I actually start to gain any interest in you take snowflake snowsteph2 Abba blee the first time that I’ve actually been interested in buying the stock and it’s not even going to be as a long term investment.

2:56
It would be as a swing tray has very nice. Basing pattern, is the first time I’ve actually seen a workable pattern to trade off of, maybe I get in maybe I don’t, we’ll see how the pattern plays. In the coming days but that initial offering when the thing first comes out, people are rushing. They’re putting their orders in. Yeah, when it first comes out, it’s going to go straight up, but can you get filled out a good price?

3:15
No, you can’t. Can you manage the risk know it’s going to go up and down all over the place, you’re going to get whipsawed emotionally financially, it’s not worth Planet. So, so wait for this thing to come back down, I mean, it’s the best way to go. The other thing, too. That should have you concerned about buying these IPOs, you go back to like the late 90s right before?

3:32
The.com bubble crashed, you have people. Russian IPOs out there like crazy, and you still have many more coming out this year. You got stripe, you have instacart, you have many, many more. But most of them that come out, they don’t do that great. Yes, you have Airbnb and you’ve had PLT are, they’ve been decent.

3:52
Okay, they’ve had some pretty good runs. But they didn’t go to zero to a million dollars like everybody was expecting like they were going to retire off of this thing. Know they had a good run but those are really the only two that I can point to of late. That was well hype that actually did, okay, but most of them are not going to do, okay, snow didn’t do, good Bumble, didn’t do good going back.

4:12
A few years, Facebook and Twitter to not do good at CM Pinterest, doordash of late, did not do good. So there’s no point in just trying to chase this crowd and if you think, you know better than the rest, you don’t, you’re fooling yourself. Nobody knows how This thing’s going to go, you can look at precedent and look at the history of these.

4:30
Most of these IPOs and see how they done. You can realize a this thing hasn’t done much. I’m also taking a look at the Schiller PE ratio and it is crazy. I mean, For those who are not familiar, with what a PE ratio is price divided by earnings. It really tells you how expensive from a fundamental basis and I’m not a fundamental traitor but I do look at some of these things from a larger context standpoint from time to time.

4:53
And it tells you basically how expensive are these stocks that you’re buying right now and the Schiller PE ratio is at 37, that means people are paying thirty seven times and price for what the earnings are worth. Historically, we’re somewhere between like 18 to 24 is usually like the sweet spot for the market 37 right now.

5:14
The only time since going back to 1870 where that’s ever been that high was in the.com bubble, we got over 245 before it eventually crashed. Yes, we could keep climbing up that high, but a lot of this market right now what we’re seeing has a lot of the same late-stage feelings that you saw back in the.com bubble and I’m not here to say, okay, Market crashes in a minute, we’re stock.

5:35
It’s crashing tomorrow. I’m not saying that, I’m not saying that the market can’t still rally for another year to year and a half. But if you’re looking for long-term investments in, these IPOs that are coming out in the ninth inning, you’re better off waiting because if this Market does have a significant correction or even worse a crash, these IPOs that you think you’re buying at a steel today is going to be significantly significantly lower, maybe 50, 60, 70 percent down the road.

6:06
Now, you can say, well, Ryan that could happen yours for now. Okay fine. But if you invest it, and these stocks right now and you’re holding for years down the road, you’re still going to be 50, 60, 70 percent down long as I’ve been trading, I’ve never seen a market, not eventually pulled back. The markets are like rubber bands if you keep stretching, and stretching them, and stretching them, eventually that rubber bands going to snap, which is not the best feeling world that usually hurts a lot or it’s just going to you’re going to Simply let go and it’s going to contract when it does.

6:33
That’s kind of like price price action. When price And get stretched far too much to the upside. It’s either going to snap and you’re going to get a significant crash like what we saw in 2008 and 2012 or price is going to contract like 20 or 30 percent. Either way it’s going to offer some incredible buying opportunities in these IPOs that are coming out right now.

6:51
They’re not long-term Investments at this point, at least, not in my opinion. And everybody’s talking about coinbase. It just like everybody’s talked about all these other recent pipe IPOs but in. And what’s funny is that they think that they’re unique in that they’re like in on something that nobody else knows about the only reason that I’m doing this podcast.

7:09
Cast on coin basis because everybody’s talking about it. I’m even holding off on going through the email that I got that. I wanted to cover to talk about coinbase upfront. I think about it. I mean, we are getting the crumbs when it comes to these IPOs when these stocks go public. The big Banks, the Wall Street guys, all these people who are in the know, and who went to Ivy League colleges and their daddies have made him, little trust fund babies.

7:31
They’re the ones that are getting in on this and what are they doing? They’re selling it to you when this thing goes public. And when they start, letting it straight, the same people who excluded you, you’re now offloading their assets and to your account. That’s kind of stupid, right?

7:51
So yeah, there’s going to be a Feeding Frenzy for coinbase and there’s so many people who are going to be simple. Not only Coinbase. But for many IPOs to come. I mean these companies that have yet to go public their crazy, not to go. Public has, everybody’s willing to give them these crazy valuations because the public will eat it up. They know they can offload those shares.

8:07
So of course, they’re gonna Jack the price and value of the company to the Moon because they know that the public with all this Timmy checks that are coming in and all the extra money from unemployment coming in. Yeah, sure. People are going to people are going to eat this stuff up man. And so these companies are going to keep going public and all you’re doing is really just enriching Wall Street.

8:27
So that’s really all I have to say about coinbase moral of the story. Don’t go crazy on Wednesday, April 14th. For the coinbase IPO, there’s me plenty of time to go by it. It’s not going to the moon on the first day.

8:43
Don’t get crazy about it. Give yourself like three to six months before you really make a trading decision on it. Now for the email, got this one coming in from Sweden, I got to give this guy a good name. I’m gonna give him the name. Eugene Eugene right?

8:58
Hey, Ryan, me and my brother listen to your podcast and we think it’s superb. Question is, is low beta stocks and alternative to keeping a short position? Your portfolio, as a good risk management strategy. We just started swing trading and I’ve noticed that when the index drops, my low beta stocks keeps my portfolio, floating shorting is a bit more difficult.

9:19
Sweden then in the u.s. I suspect great job and thanks for all the great tips since I spent a lot of time on the coinbase. I kind of got a quick email that I could address some of the points with and make it a pretty quick in and out. Answer for you guys.

9:36
But first before I get into this Question, gotta talk about this bourbon. I’m drinking Russell’s Reserve. Kentucky Straight Bourbon whiskey. It’s 10 years. 45% alcohol, 90 Proof. Again, H, 10 years. Stuff is good, man.

9:53
I tell you when you smell it, it’s great. It’s got a very sweet taste, but it’s funny because it almost tastes like an old fashioned as crazy as that sounds. I know you put a lot of other ingredients into an old-fashioned. Literally tastes a little bit about you can old-fashioned fact I had a couple of my friends translate.

10:09
Hey, Is this almost like tastes like one of my old Fashions and I’m making like, yeah, it does. It does. And so this is an amazing thing. I’m going to give it a rating of 81, just really good. You can almost taste some of that like dried fruit, bitters, those orange, bitters.

10:24
I mean, it is really good if they didn’t do any of that it just it’s an amazing flavor but back to what Eugene had to say here from Sweden. No Liu. Bei, the stocks is not an alternative to shorting. Now, you have a lot of companies that will flee to the low beta starts, when the market starts selling off.

10:40
But usually that’s only initially during the sell if that doesn’t last. So, you’ll have a lot of, like, funds that will go into your utilities your Staples. Those you’re like, you’re very defensive stocks telecom stocks. And, and real estate stocks actually had to get up out of my seat and go look up the sectors because I knew I was forgetting one.

11:00
Golly anyways. Those are the the sectors that people will tend to flee to initially when there’s a big Market correction now, would I use those to short it? No. But a lot of your mutual funds and Wall Street Pros. They will go to those as a way to park their money because a lot of times, they can’t have a huge cash position so they always have to be vested in something so they’ll go for the low beta stocks.

11:23
Initially those things will rise a little bit. But ultimately, if the market sell-off is pretty steep, it’s going to fall with them at you. Go back and look at 2020 covid. Same thing, you saw that big Correction that eventually hit all the sectors and that includes your little bit of stocks because historical utility Staples.

11:39
Those are much lower beta stocks and they also like the stables and utilities for their dividends because when the market sells off, they’ll get a little bit in the form of a dividend that will help offset some of those losses. But ultimately isn’t an alternative to shorting stocks. No, it’s not, yes, it’ll help you beat the market.

11:58
Because it’s a little bit of stock. So if this thing has a beta of .5 in the stock market drops, 50%, those stocks are only going to drop 25% for me. Personally, I’d rather be in cash because cash isn’t going to go anywhere and during sell us the value of the dollar actually tends to improve.

12:14
And Eugene says that shorting stocks is a little bit more difficult and Sweden. And if that’s the case, well, one of the things that you can do is try to play Hoods by buying puts put options. I don’t know if they have those in Sweden, but if they Adieu, that’s one alternative the others to see if there’s any Ultra ETS or inverse ETS not a huge fan of the ultra inverse ETFs because that doubles or triples your Beta And if you’re right yeah it’s great.

12:38
But if you can just find inverse ETFs, that are like 12 12, where if the S&P 500 drops one percent, you go up 1 percent. I like those too, and that requires only a long position. So, you got to see there’s, there’s always Alternatives out there. You just have to look around and see what’s out there for.

12:54
So look for the inverse. TFS at those. Don’t have it start studying up an option. Some I’m not a huge fan of options. I don’t recommend the necessarily that you trade options and I’m not recommending anything for that matter. But I would definitely look at what they have on the options Market, because that’s another alternative to not miss.

13:13
Not necessarily the right option for you, possibly, especially if you’re new because there’s a lot of volatility and options. So you want to be careful there. But to answer the question, Is low beta stocks in alternative shorting stocks. Absolutely not also like to encourage you because I put tons of short setups and I put a lot long steps out there.

13:31
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13:47
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14:04
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14:20
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14:40
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15:17
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