The Dogecoin Rally | Podcast Episode #169

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.

0:25
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 I’m not doing an email today. Instead, I’m just gonna talk to you about the Dogecoin rally. It’s pretty crazy, right? I mean, it has really taken the market by storm and a lot of people are just like excited as can be about it. It a stock market. You’re starting to see a little bit of a correlation where when the big rallies happen in the cryptocurrencies, the stock market suffers. I mean, it’s got the attention of everybody.

0:59
And a lot of people now are, you know, calling me, texting me, and they’re saying, Ryan, do I get into this thing? What, what do I do? It’s like, that’s all people are talking about. I wish we could get back to the stocks. I really like talking about stocks, but it does require a little bit of attention here and worth dedicating an episode to.

1:15
So that’s what I’m doing with this episode here today. As for my bourbon of choice. I’m actually not quite in just a bourbon mood tonight. So what I went with is my good old trusty old fashion. Now, every once in a while, if you’ve been listening to this show for any time, uh, every once in a while I’ll throw in an old fashioned. I won’t just go with a, a new bourbon. And I make a good old fashioned, and it’s come through a lot of trial and error. So I’ll give you guys the recipe real quick, and it’s a 10 out of 10. It’s the only thing I’ve ever rated a 10. It’s a 10. But I use Knob Creek 9 year. If you want to kick it up a little bit, go with Old Granddad 114, which is what I’m actually using here.

1:51
But typically my recipe is Knob Creek 9-year. Then, I put in 6 dashes of the angeristic bitters, 2 dashes of the orange bitters, and then 3/8 of an ounce, simple syrup. Now, how do you make simple syrup? It’s just like 1 part sugar, 1 part water. Put it on the stove, heat it up, mix it up till it’s a nice simple syrup. So, put that in there and then I put 2 ounces of bourbon. Again, you want a strong one, you go with 114 old granddad, or you go with the 9-year knobre. Both of them are solid choices.

2:25
And then put a nice cherry, don’t go to like a grocery store and get like the generic knockoff cherries. Go get something that you’re gonna spend like 15 to $20 on. There’s some really good cherries out there, and then make sure to like peel a nice little slice of the orange peel off, express it, meaning you like squeeze that orange peel over the drink, rub the rim, and you got yourself a good old fashioned. Again, it’s 10 out of 10, it’s a solid. Solid old fashioned.

2:46
But back to this Dogecoin rally. For those who don’t know much about Dogecoin, it actually started off as a joke. Two guys, they started it up thinking that it would just be a joke against all these crazy cryptos that were coming onto the scene trying to gain legitimacy with Bitcoin, and all of a sudden they find themselves in the middle of the Bitcoin universe now with a coin that is based off of a dog meme.

3:11
Go figure. Right? And now this thing has gone from less than a penny up to 64 cents a coin. As of this podcast here, I’m watching it real time here. It’s pretty crazy. And people are fascinated by this. One of the reasons why I would be shocked if it goes all that much higher is because some of the dumbest people I know, and I know I’m coming across really snooty saying this, but you know how we all have those people in our lives where we think, these people are idiots.

3:37
They’re just idiots. You might like them, you might even love them, they might even be family, you know that they’re an idiot. Well, I got a couple of those in my life, and I’m telling you, these people are about as dumb as it gets, and I’m not talking about like intellectually dumb. I’m talking about they’re lazy, they’re always looking for a free ride, and they just don’t do nothing with their lives.

4:00
Lo and behold, getting a phone call from these people. And they say, hey. I want to buy some Doge stock. Should I buy it? It’s like, well, I didn’t know Doge was a stock. So that tells you right off the bat. People are buying this stuff. They actually think it’s a stock. It’s a currency. It’s a cryptocurrency.

4:16
And it trades against the US dollar. Here are these people, they, they think they’re buying a stock. And they’re getting into it like I got a couple $100. I’m gonna get into it. What do you think? I was like, I’m not even getting involved in this because here’s the reason why I don’t want to get involved. I told him, yeah, go buy it and it doesn’t work out. It’s my fault.

4:32
I tell them don’t buy it and it keeps going to Infinity and beyond, it’s my fault. So I’m not getting involved in that. But here’s the thing, people are doing that right now. They’re all jumping in. Let me tell you, there’s people buying that over 60 cents a Dogecoin right now. Why? Because they think that they’re missing out. The whole fear of missing out is such a crazy emotion, and I’ve never seen it played out as much as I have over the last year and a half.

4:47
Since COVID started, man, everybody has this crazy, crazy fear that they’re missing out on everything. GameStop one day, it’s AMC the next day, it’s BlackBerry. Now it’s Bitcoin, then it goes on to Dogecoin, and you read these message boards. And these people are psyched out of their minds and everybody thinks that there’s just gonna be tons and tons and tons of millionaires that are made out of this and that’s simply not gonna happen.

5:21
Now that doesn’t mean that there’s not going to be millionaires that are made out of this. Of course there already is millionaires that’s been made out of it, but the large majority are gonna lose. The stock market needs the large majority of people to lose when it comes to trading. They can’t all be successful. Case in point, let’s say somebody bought this thing at 1 cent per coin and let’s look a little ways down the road, and let’s say it goes up to $1 per crypto coin.

5:41
So the guy who bought it at 1 penny, he’s now trying to liquidate at $1. Who do you think he’s selling to in this situation? Do you think he’s just getting out? That’s what a lot of people think. They think that when you get out, you’re just getting out. They don’t realize that when you’re getting out, you’re actually selling it to somebody who’s willing to buy it at the same price.

5:59
You want to know what’s crazy is the person who’s buying it at that same price thinks that they’re making a prudent decision just as much as the person who’s selling at $1 thinks that they’re making a prudent decision. When people are buying a stock, when people are buying a crypto coin, they don’t realize that somebody doesn’t want to be in it any longer and they’re willing to sell you their shares or their coins to you.

6:19
So you got two people involved in every trade, and both people think they’re making a prudent decision here. But back to this guy, he buys it, and I’m giving you a hypothetical here, OK? The guy who buys it at 1 penny and he sells it at $1 and it’s not even at a dollar yet, but let’s just say it gets to $1. We’re trying to keep the math simple here.

6:35
If this guy put $1000 in at 1 penny and he’s selling it at $1 he’s now got about $100,000 in his account and he’s liquidating it. Well, when he liquidates it, he’s liquidating it to a whole bunch of sellers likely. And you got Johnny here who’s buying $200 worth of those coins, and you got Mary Sue buying $500 worth, and you’ve got Jimba buying $400 worth, and maybe you got another guy buying $2000 worth and another that’s buying $1000.

7:02
You get the point. There’s a lot of people that are having to fill that order in order to sell that $100,000. Maybe it’s somebody who invested $10,000 at one penny, now he’s selling it for a million dollars. It’s the same concept. It’s a lot of people that are probably getting involved in liquidating his position.

7:20
Now he’s coming out a winner, but this guy who now is trying to liquidate $100,000 he might have 10 or 200 people involved in that transaction. And guess what? Let’s say Dogecoin never gets over $1 and it sells off, goes back to 50 cents. What happened? He just created 200 bag holders, $200.

7:35
So that one guy made a lot of money, but there was about 200 people that lost 50% on their trade. You follow me here? What I’m trying to tell you is that more people will lose off a Dogecoin than what makes money. But if you go on the stock twits, and it’s pretty impressive, the enthusiasm is out of control.

7:56
Now I’m gonna read you a couple of them. One guy says, and his name’s McCook. No sellers, lots of buyers, that simple. Eframe 16 says, back it up. Marcosis says, what do y’all think’s gonna happen on Saturday? Risk it all 76 says, bleeping paper hands.

8:14
OTC Empress says, Hey y’all, rich mofos holding Doge for a year. Luke 9:37 says. Doge Quinn, this is now a long-term buy. Wow. Short trade says ironically, I can’t believe this is happening. And he’s actually bullish on it.

8:30
I could go on and on and on about these things, and I’m just pulling it up on my phone. People are absolutely bonkers about it and they’re really pumped. But what they don’t realize is that most of them are gonna lose. Some of them will get rich, and I’m happy for them. But most of them are gonna lose. What you don’t want to be is one of those people that lose.

8:48
I’m telling you, there’s some idiots that are piling into it right now because they feel like there’s a free ride out there and they’re not getting any of that action. And I’ll be remiss if I didn’t tell you that I have been tempted to go open up an account and buy myself some Dogecoin. Because there’s this inner feeling, and I know that like the manner in which I trade and everything, I illuminate the emotions quite a bit.

9:09
But it doesn’t mean that I’m immune from emotions. I look at Dogecoin going, I’m like, man, am I missing the boat on this one? Should I go ahead and just buy it? It’s at 64 cents. Maybe it will go up to $1. Maybe it’ll go up to $2. Now people are already talking about $3. They haven’t got to $1 yet, and they’re already talking about $3.

9:25
But I also know too that kind of thinking, that’s coming straight from emotions, the fear of missing out. And I’ve done this a long time and I’ve kind of tapped into my inner self where I, I know what those feelings are that I’m feeling. That I know not to necessarily react to those feelings, and that’s a big thing. No matter how good of a trader you become in life, you’re not gonna completely eliminate emotions and feelings and your trading.

9:46
But it’s important to be able to recognize what those feelings are and how they can be a hindrance to your overall ability to trade successfully over the long term. The Dogecoin rally right now reminds me of a video game that I played back in the 90s. It’s called Lemmings. I think it was like this little handheld Sega Genesis thing that I would play.

10:03
Got it for Christmas one year. And the whole premise of the game is to guide a bunch of these lemmings, and lemmings are like these things that follow each other. So it’s like that old saying where your mom would tell you it’s like, if everybody jumped off a bridge, would you jump off a bridge? Well, lemmings will jump off the bridge. So this little video game, you’re trying to get them from point A to point B safely, and there’s all these obstacles in the way and there’s all these things that you got to figure out what to do and what you want them to be able to do to make them get there from point A to point B without sacrificing any of these lemmings, but they all follow each other.

10:29
If one does one thing, they’re all gonna follow what that one lemming does ahead of them. Same thing like going from one extreme to the other, you lead the video game world and you go into the fishing world. When you’re fishing for Mahi over here in Florida, you get into a school of Mahi, you catch one, you leave them on the line, they’ll all keep following that one dolphin.

10:51
You’ll just keep catching more and more dolphin, and you can come away sometimes with 200 dolphin in your boat. It’s crazy. The same mentality with the dolphins and the same mentality with these video game lemmings is what you’re seeing right now in Dogecoin. People are getting into it because they’re seeing everybody else getting into it.

11:06
People are talking about it on social media, on their Facebook, on their Twitter, on their Insta accounts. I know one guy that’s posting a chart probably like every hour about Dogecoin, and their confidence isn’t necessarily even in the coin. It’s just in the hype. It’s in the fact that Elon Musk tweets about it.

11:24
Some people are basing their analysis on it off of the fact that Elon Musk is going to be hosting Saturday Night Live in a few days. But here’s the thing that I would tell you guys, no government has ever conceded control over their currency to the private market.

11:40
And Bitcoin, Dogecoin, whatever coin you want to look at, it’s all in the private sector. And the Federal Reserve, the US Treasury, they’re not gonna concede to them. So what did, what did you hear over the past couple of weeks? Janet Yellen, she dropped a bomb and it caused quite the panic sell as a result, but she says we may tax the crypto gains all the way up to 80%.

12:02
Now, should we be worried about that? Yeah, you should because you know what, she’s firing a shot across the bow. And that’s not something to raise revenue with. They’re not trying to raise revenue that they would get revenue if they did that. They’re trying to destroy it. They’re trying to stop it.

12:18
And yes, you can regulate something into oblivion. And if they want to go tax that 80%, crypto’s not going anywhere. And let’s not forget about the volatility that comes with Dogecoin and Bitcoin. It was just a few years ago we saw Bitcoin go all the way up to $19,000 and come all the way back down to $3000.

12:35
So is there the potential that Bitcoin could go from being over $50,000 back down to 5000 or $6000? Yeah, there really is. Dogecoin just a couple of weeks ago, saw a move all the way up to 28 cents and come all the way back down to 15 cents.

12:51
That’s a 47% move in just a couple of days. The volatility is extreme in that. Now, the people who are getting into it, they don’t care about risk. They don’t care about it at all. If they’re wrong, they’re just hoping that it comes back. They’re not living the trade another day. This is their trade. And on the outside, it sounds admirable.

13:07
It’s like, oh man, this person’s putting in everything he’s got into it. You should be admired. No, he’s being an idiot because he needs to be practicing risk management and practicing risk in something that’s trading 24/7, 7 days a week. For one, you can’t watch it the whole time because you gotta rest. At some point, you’re gonna have to rest. So you To use stop losses, but most people are not using stop losses.

13:25
But then you’re getting these wild swings where you can swing like 50%. So you also risk the chance that you’re going to lose a lot of money. Now the people who are also talking about, oh, look at this huge percentage gain, I’m up 1000% on crypto right now. They only may be putting in $50. So yeah, you made 100% on Dogecoin this past week.

13:42
Congrats. You just increased your account from $50 to $100. But the people who have a lot of capital and are trading with the money that’s very, very meaningful to them. Like, if it doesn’t work out for me and I crashed my account, I may not be able to pay the mortgage. They’re not probably going to be putting big positions on things like Dogecoin.

14:00
But what is good value? I would probably say swingtradingthestockmarket.com. The patron site that goes along with this podcast. With it, you’re going to get updates each week on the S&P 500, the Russell 2000, and the Nasdaq 100, plus you can get multiple updates to my watch

14:26
List each week and multiple charts each day of the most intriguing stocks that I come across, along with my daily setups that I’m following each and every morning. So check that out, swingtradingthestockmarket.com, and to summarize this podcast episode. I would tell you, don’t get caught up in the Dogecoin phenomenon. Remember, these people, they’re going into it. A lot of them are going into it with very small dollar amounts, and that’s not trying to insult people who trade with smaller dollar amounts, but there’s not a lot of risk to it when you are.

14:47
So yes, you can endure a 40 or 50% price swing when you’re trading $50 or $100 because the long term negative impact that’s going to have if you’re wrong, isn’t going to hurt you too much. People are chasing, they’re like lemmings, they’re like the dolphin that you catch out here in Florida when you get into a school when they start following each other and they’re gonna do what the other person’s doing.

15:08
And as a result, only the worst things happen, their emotions are ruling, they’re in it because they feel like they’re missing out, and they’re looking at these message boards where everybody’s telling them that they’re gonna colonize Mars and they’re gonna go straight to the moon with Dogecoin and they believe it because the worst thing that they could be is wrong.

15:23
There’s no risk management with most people that are trading Dogecoin right now. And if they are, it’s very difficult to manage it with any real precision because the swings are so freaking wild. So that’s gonna do it for this episode. I’d encourage you to leave a 5 star review if you can on the Apple podcast platform or whatever podcast platform that it is that you are listening to me on.

15:44
Helps me continue to grow this channel, it helps me to continue to grow this channel and to provide you with great content every week. And make sure if you have any questions, and I’ll get back to it in my next episode about stock trade. Be sure to send those questions to me, ryan@shareplanner.com. Thank you guys, and God bless.

16:03
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16:19
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16:36
If you have any questions, please feel free to email me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.