Dogecoin Mania + Sector Rotations | Podcast Episode #165

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, trace 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 and we got a lot of craziness going on these days with Dogecoin, don’t we?

0:37
We’re going to talk about that. Should you be buying? It should you buy Dogecoin at the current prices? Should you wait for a pullback or so you just avoid it altogether. We’re going to get into that and more before a little bit of a background on Dogecoin, this was something that was started as a joke. You know, you had all of these altcoins coming out, you know, they were trying to battle for Supremacy with Bitcoin, they were coming out.

0:56
They were saying this is going to be the next zillion dollar Bitcoin. Okay this is the Next thing. So you had all these things coming out at the time. They’re all trying to go mainstream and these two guys, Jackson Palmer and Bill Marcus come out with Dogecoin. And what they did with that is they were essentially just setting it up to kind of make fun of all these other existing altcoins trying hard to become relevant.

1:16
And at that time, they chose this dog. That was the face of a very popular mean. And they made that the face of their coin. Not thinking anything would ever come of it. All of a sudden. This thing is now, become a multi-billion. Ian dollar coin some estimating as high as 55 billion dollars so you got everybody piling into this thing.

1:35
They’re all excited. They’re saying hey it’s at 30 cents right now it’s going all the way up to a dollar. When will it get to a dollar and then the thing is about Dogecoin it may see it. I’d be shocked if it does. I mean, but who knows when you get these phenomenons how high they can go but is in the grand scheme of things, it’s a, it’s a pump and dump there’s people that are looking to hold it for over a year because they don’t want to pay long-term taxes.

1:58
That would be the least of my My worries, honestly. And this isn’t any Financial advice, but there’s no way I would hold that thing for a year. You’re setting up for an incredible incredible. Let down if you do that because there is a lot that can go wrong in a your this thing Harkens back to the days of the Tulip Mania and the 1600s obviously I wasn’t around for that neither were you, but the price of tulips went up to hundreds of dollars per to look guys.

2:23
This is something that dies in a few days and people were buying these things up. And I’ll be honest, I think the Dogecoin phenomenons more stupid than buying tulips at 100 plus dollars. But why is it so appealing to so many people because it’s trading at pennies?

2:39
People are saying I can buy so much more. I look at Bitcoin is that 64,000 horse? I can’t buy a whole Bitcoin but they see those questions that oh, I can buy a lot of those quaint and what if it happens to become as viable, As a Bitcoin and they start thinking, why be worth billions of dollars.

2:56
And a lot of people are doing this thinking that they’re going to get rich and always tell people don’t start trading stocks, even though that’s the reason why we all get into stocks, don’t make that your primary focus trying to get rich because you’re going to be sorely disappointed when you become incredibly poor because you start taking on these incredible risk and Dogecoin is one of the riskiest out there right now.

3:15
It doesn’t matter if it’s trading at 30 cents if you put ten thousand dollars in Dogecoin at 30 cents or Five thousand dollars / Dogecoin. It’s still the same risk at that volatility is there and that volatility is ridiculous. You’re going to experience swings of 30, 40, 50 %.

3:33
I mean, just the previous day it went up to 100%. And when the crowd is piling into everything they’re wrong, when the crowd is doing something than the stock market, they’re the ones that ultimately get burnt. The masses don’t win in the stock market. I know everybody’s saying this is going to the Moon we’re taking back Wall Street.

3:48
It’s time for the little guy to win and I hope you do. But in the reality of I know that you won’t because the mass is always lose because when the mass has become too piled into something the market will correct itself. And we’re getting to that point here, very fast the markets about ready to correct itself on this Doge coin and crypto currency phenomenon.

4:08
I think a lot of to it has to do with the fact that the stock market has been trading a lot more sideways of late, rather than having the smoking hot gains off of the March lows that we saw last year. Instead we’re getting a lot of 2 up 1 Down, 2 up 1 down. Kind of like a two steps. Forward one step back, kind of a thing where people are just not making the kind of money in the stock market that they were before.

4:28
So what do they do? They’re trying to go where the volatility as they see the crowd moving to Dogecoin. That’s where they’re going into. They don’t even know what those coin does. You can even use it anywhere, but their hopes is, oh, it’s going to, it’s going to go mainstream. It already is mainstream and there’s really not any applications for it. And let’s be honest to a lot of the, the hype behind it is because of Elon Musk Elon Musk keeps tweeting about it.

4:47
He thinks it’s hilarious guy doesn’t care if it goes up or down, but for you guys that are Sting money that for some of you probably can’t afford to lose, you do care. And when this thing does come tumbling down, it’s going to cost you a lot of money because you got to manage the risk. It doesn’t matter if you’re in stocks, if you’re in crypto, if you’re in Dogecoin, you got to manage the risk and these pump and up, they’re going to go way up and then they’re going to come down faster than you ever imagined.

5:11
And you thought it was hard as Dogecoin was going up to be able to get into the sock. Wait until you try to get out of it, there’s no doubt in my mind that the the covid has played a huge role in the success of the Antsy. People at home, they’re getting their $1400 Timmy checks. They have multiple kids are getting multiple checks, and on top of that, if you’re unemployed, you’re getting an extra $300, a week, guys.

5:34
I mean, people are making a lot of money off of not working right now and what do they do? They’re putting it somewhere and they’re going after the Dogecoin because they’re just trying to make more money off of the free money. They’ve already got and I can’t really go anywhere without hearing. Somebody talk about Dogecoin, it’s going to a dollar. That’s what they’ll all say. That’s gonna be one heck of a resistance to break through with it, even gets close to that and for your sake, I hope it does.

5:53
But the Reality of it, it’s going to struggle. So you’re crazy. If you’re not taking profits along the way, take some profits, raise those stop losses, have a line in the sand to say. Okay, if it goes down to this level, here, I’m out. The one thing that’s for sure, whether you’re trading, anything cryptos, bonds, stocks anything, Prices will go up and prices will go down after you get out, you can’t do nothing about that.

6:16
But what you want to do is be able to get the Lion’s Share of a move and after you get out if it continues to go up, then so be it. Okay. You had, you had a good run out of it move on but so many people right now, they’re not going to get out. Why? Because they always think that they can get out of the top which they can’t and they’re worried about that. People are going to keep making money after they get out and they psychologically can’t handle that.

6:35
I have had so many trades that I’ve gone out and it just keeps on going up. And that’s okay because I did my trade, I made the right move. They executed and I move my money to a new trade with so many people can’t handle that concept. This is it for them. This is the big thing. This is there whale of a moment. They got to hit it big and when you do that, you’re taking on incredible amounts of risk and you’re going to lose incredibly in the long term.

6:56
Remember the masses, don’t succeed. In the stock market, the masses will lose, and if you’re part of the mass, that’s going into this Dogecoin know that most of you guys will lose that this So be different, take some profits along the way, know where you’re going to get out if you’re already in it and if you’re going to get in it, know where you’re going to get out before you ever do.

7:16
That’s the way that you succeed in the stock market, having a risk plan knowing how to manage the risk on all your trays. Now, for today’s email, we have an awesome awesome question. It’s about sector rotations. And it comes from a guy we’re going to call Mississippi slim.

7:33
I didn’t give him that name. He gave it to himself and he tells us that he’s anything but Slim. So what does Mississippi Slim? Have to saz’s Ryan? Love the podcast. I’ve started trading relatively recently. Yeah, and I’m learning a lot from your podcast. I love the idea of managing the risk and the profits will take care of themselves.

7:52
My question is about sector rotation. When I first started trading, I was in the tech stocks because they were moving the most, and they get the most hype. I did pretty well, but most of them have crashed since February. My stop loss is kick me out. So, it’s not like, I’ve lost a lot of money or anything, I’m just having less luck trading recently, presumably because the market overall is more sideways trending at the moment, but my trades just haven’t been playing out the way I anticipated.

8:16
I have found lots of information about Market sector rotating and cash moving to other sectors. I’ve done some digging. You can sort of understand the concept of sector rotations was still don’t really know how to tell where to look for the best traits. Sorry, long way of getting to the easy questions first.

8:33
What are the sectors and how do you look at? Sector rotations, how do you tell what sectors you should be trading in? Does it matter? Do you keep your funds to first fight across many sectors and not worry about it. I love the content and keep up the good work, Mississippi slim, and before I dig into the details of his email, what AM I drink it today.

8:53
It is Russell Reserve, Single Barrel, 55% alcohol, 110 proof, the stuff is good. Now, you remember in the last podcast, I did the Russell’s Reserve, 10 year, I gave it an eight point one. So this thing’s up against some stiff competition from its own likes and it’s got, its got a very like sweet smell to it.

9:12
It, you know, when you smell it, it’s got a nice little honey flavored smell to it, but then when you like drink it, it’s got this like Sweet toffee flavor, and it goes into like, quick spice. Like, it doesn’t like, Linger on that. That’s that toffee flavor at all.

9:28
It goes straight spice and it’s, and it’s pretty intense, but it’s not too much. Like you can handle it. And the finish, the Finish is more, like a licorice flavor. I don’t like it as much, even though this is a more expensive bottle, I don’t like it as much as the the 10-year. I think the Ten Years better, it’s a cheaper price.

9:46
This here I would give it a 7 7 out of 10. So did I set this guy’s email? There’s a lot. I second sometimes I like to go and dig into the parts of the email that’s not really the questions but they’re more like comments that he makes that kind of goes into like the underlying feelings and thinking that this person might have one of the first things he said is he talks about?

10:06
I did pretty well but most of the stocks that I’ve been trading have crashed since February. Well, there’s a lab in a lot of pullbacks in the tech sector and a lot of them are rebounding. You got tech training back at all-time highs. Again, you don’t have as much participation from the broader Market in this current rally.

10:23
That we’ve seen over the last three or so weeks. But when he’s talking about, you know, it’s Crash since February. Maybe he’s just saying that without realizing that, it’s not really a crash, but I think it kind of gets to like a little bit of the, underlying feeling that some of these movements that he’s experiencing in the stocks, they’re a little bit more crazier form because he’s probably trading a lot more volatility and maybe he’s trading with to tie two stops or too big of position sizes.

10:43
So that’s questions that he should be asking himself. Hey, is it feel like markets crashing? Because the position sizes that I’m taking are too big and if it 10%. It feels like a personal crash to me or is he training like too big a stock? Maybe he’s training a lot of your like, small caps and small caps. I’ve had a hard time of lie so are the small cap struggling and as a result is too big of a position, some of these small gaps in small caps tend to have a lot more volatility to him so that can be the case as well.

11:07
So I just picked up on that. He said I had sent you know talking about how I had crashed in space, where am II, don’t think it’s crashed but I can see where it’s been difficult because it’s definitely not easy trading out there right now. And he talks about how the markets, you know sideways trending at the moment. It’s kind of his kind of isn’t. I mean, overall I would probably say it feels that way but I mean, we’re sitting at all-time highs and creating new ones on the S&P 500, but the S&P 500 is benefiting from.

11:29
Is that each day either the NASDAQ or the Russell are ripping higher and that tends to pull up the S&P 500, regardless of what the other index is doing and then, like I said with less and less stocks participating in the rally. If you’re not in the right stocks, you’re not really benefiting from this Market rally, but he’s a good example in real-time.

11:46
Why you use stop losses. He’s talking about how his trades are not working out for them as he had anticipated. Painted them to you, almost have to take no expectations at any of your traits. I always assume that I’m going to lose on every one of my trades and sometimes it feels like I am losing on every one of my trades but nonetheless that’s that’s my mentality that I go into it by.

12:03
I’m right, I’m lucky. That’s that’s how I won. I don’t get overly emotional and I don’t try to evoke any feelings towards those stocks that are the positions that I hold. But he asks me, what are the sectors? So Caesar, so there’s 11 sectors that I follow. Okay, they’re they’re mature.

12:20
Jules energy, financials Industrials, technology, real estate. Discretionary Healthcare, utilities Staples and Telecommunications now. Yes, I had to write those down because if I try to do it from memory, I will forget at least one of them and then I’ll be doing this on air and I’m thinking, what was that one that I forgot.

12:38
I can’t figure it out but I actually also, Track all each and every day. I’m always looking to see which sectors are leading, which ones are not lie. Also want to know like how many of the 11 sectors are trading higher versus trading lower? So, if the markets trading super high on the day and then all of a sudden only like three out of 11, sectors are trading higher with it.

12:59
That’s going to give me a good idea that this markets may fall apart here because there’s nothing really participating in this market rally except for a few big names. You get that a lot when it’s just like financials and energy or if it’s just technology you can see those kinds of days. We’re Two or three sectors are rallying the market higher and you can use ETS.

13:16
Now the ETFs aren’t going to include every stock. They’re going to include like the main names in that sector, but they’re not going to include all of them. I use on TC 2000. They have a separate watch list that includes every stock for every sector. It’s all categorized. So, when I’m looking at financials, I’m looking at the entire financial sector and how many in all the stocks that are in it, you go with XLF, your might be only looking at like 20 or 30 stocks that are included in the ETF.

13:39
And so, yeah, it’s going to include Bank of America Citigroup Poop MasterCard and stuff like that but it’s not going to include every Financial stock. So sometimes the ETF might be doing better than the actual sector itself. But it still will give you a pretty good reading on the overall sector. So you know that you got the spiders ETS and you have a lot of those out.

14:00
For instance, financials I use XLF materials. I will use Excel be. I don’t want to get into all of those for this particular podcast because I just don’t want to be rattling off a bunch of symbols. And so, that’s how I look at rotations to. I’m always looking at the technical Also some fruit of the sector’s just like I would, if I’m looking at it individual stock, it’s very easy to see what’s what has money flowing out of a sector.

14:20
If it’s starting to trade sideways, and you’re starting to see Heavy bowling, where you’re actually seeing a true legit sell off. Then that’s going to tell you right there, hey Market might be rotating out of that sector and then you want to say, okay what sectors are attracting the new buyers and then you start looking at the charts for that which ones have positive charts, you know, with strong upward momentum and you can start seeing that sometimes you’ll see like a base forming in a particular.

14:42
Sector and they break out of that base. And then the okay, you can see where it’s not consolidating any more money flowing in. And oftentimes, it’ll be at the detriment of another sector and then I also do is just knowing, okay? I like to find out what are the top three sectors every day, and that’s what I usually pay the most attention to, also the bottom, three sectors.

14:58
And then when you’re, when you’re looking at those each and every day, you’ll start to develop Trends and start noticing. Hey, you know what, I’m technology is like at the top of the sector’s everyday, or it might be utilities, and sometimes you will start to know the sectors that rally with each other, like Tech and discretionary.

15:16
Tend to Rally with each other quite a bit, but you don’t notice like all the other sectors selling off in, Tekken, utilities or Island together actually seen that this past week, but you don’t see that often. And finally, he’s asking to, he says, you just keep your funds Diversified across many sectors and not worry about it.

15:32
Now I don’t want to be in bad sectors, a lot of times, there will be certain sectors that just aren’t doing anything. Why would I want to be in those? And so there’s this popular concept of being all Diversified and across all the sectors.

15:45
I think you should be Diversified in the good sectors. And so I try to shy away from the Bad sectors like in the month of March, there was a lot of struggle in the tech stocks I stayed away from those for the most part and focused on other ones like McDonald’s and and some of the financials but I didn’t want anything to do with tech stocks.

16:01
Now tech stocks are showing a little bit more momentum. So I’m trying to get more into those right now and so you want to be Diversified in the good sectors but stay away from the bad sectors. Be not at all in those bad sectors. You don’t need any of that action and in reality, all that’s going to do is just take take away from your good traits.

16:16
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16:37
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16:54
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17:12
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17:30
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17:47
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