Is Shorting Dead? | Podcast Episode #331

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?

0:30
Hey, everybody, this is Ryan Mallory with swing trading the stock market and yes, it’s been a minute since I did my last episode. I think it’s been like a couple weeks almost a couple weeks, I guess. Nonetheless, I’m well overdue for one and the main reason why I haven’t done a podcast episode is because I’ve been launching a new Leaf.

0:46
What do you call? It’s not a new website. I’ve had this website forever but I’ve revamped shareplanner.com, its massive overhaul. I was on some real Legacy kind of content Management systems on there and well overdue. I’m talking about like systems that were 15 years old.

1:01
And so to say that a major upgrade was Overdue is an understatement. So that’s taken a lot of time that’s taken a lot of my focus and that’s, you know, I mean, anytime you’re launching a new website that’s going to take a lot of work. There’s always going to be glitches and everything else that you got to deal with and unexpected things and I’ve had my share of those.

1:21
But nonetheless I definitely want to get back into the pattern of doing these and I’m also going to start doing some more of like video podcasts as well. One of those things that I want to roll out to you guys too. So today’s episode is not going to be an email from you guys. Even though I do love doing y’all’s. Nails something that I’ve really been thinking about.

1:37
I’d probably say for about three years, three years, at least and now I actually I would go back not even doing the math, right? I’ll go back about five years I’m goes back to about 2018 and that is is shorting. Dead is shorting, the stock market debt. Now I know one of the things that I probably run across by doing a podcast episode on this, when the market is super hot, you got the NASDAQ up like 20 plus percent on the year so far.

2:02
It since January is that I’m perfectly. In the Market at the highs. When I say this and maybe I end up doing that with this episode. Honestly, I hope I do. I would love for shorting to have some legitimacy to it. Now I’m doing a podcast episode on is shorting dead. When last year I had a really good year shorting, the stock market.

2:19
I mean, we had one of my best years and the reason why was because the market actually allows you to short it for an extended period of time. But even then, it wasn’t always sunshine and rainbows. I mean there was times last year. Were shorting felt like it was dead. There was plenty times. I mean, if you go back and look at Last year alone and we’ll get more into these stats, a little bit, 20 out of the 52 weeks resulted in a market that finished hired that’s about 40 percent, but for a bear Market, that’s not bad.

2:45
I mean, you considered the fact that since we had our banking crisis back in March and yes, banking crisis, I’m telling you, the nasdaq-100 is up eight out of the last 10 weeks since the beginning of January, we’ve only had five weeks to the downside out of a total of 20 weeks.

3:03
So 15 out of 20. The markets been up this year on the NASDAQ, so when I say that it’s shorting dead, I’m saying it in light of the fact that maybe we are starting to tap out here maybe we are getting close to a top and the markets going to take the next leg lower. I don’t mind that. I think it’ll provide some more realistic valuations for stocks and I think that would be a good thing.

3:22
It would allow for some better price Discovery. But this is like I said, this isn’t just something that I’ve been thinking about since January. I think that shorting the market at times can create a lot of stress, especially when you’re on the wrong side of it, it can create a lot of anxiety. Just a lot of fear and I have found myself on the wrong side of the market.

3:38
I found myself on the right side of the market shorting it as well, but there’s probably nothing worse than being caught in a market that’s rallying in your short, I mean that happened to me today and I felt like, you know what, if I’m ever going to do this podcast episodes? Probably be a good day where I kind of feel the wrongness of being caught on the wrong side of the market.

3:56
But like I said, question I have considered since 2018 and this goes back to 2018, you had the taper tantrum and for those who didn’t experience that There’s a lot of you that have it in 2018, the FED started hiking interest rates, kind of like what they should have done. Now in the market had an absolute hissy.

4:13
Fit you go from October of 2018, the final quarter of the Year till December, two of those, three months, the market was down, but it dropped dramatically. I want to say to the tune of like 30%. It was a ton and it was a very shocking impact to the market so much so that the feds stop cutting.

4:32
And instead of the exact opposite and started cutting Cutting rates again and doing quantitative easing. That was when I first started thinking is shorting dead for the stock market because at that point became very obvious that the FED is not going to let the stock market dramatically sell-off 2022.

4:50
If we all want to point back to 2022, did you see how long the sell-off lasted? Yes. You see how long it lasted and the fact that we only sold off 20%, I mean, the sell-off went from January till December at with about three months to the upside nine months to the downside and yet, Yet we only sold off. 20% now live.

5:08
You like that’s a lot 20%. Yes. Take a look at the stock market going back to 2000. If you really want to see an incredible run, look at the stock market Through The Eyes of the NASDAQ 100, and don’t use the log charts, use the arithmetic charts and you will see exactly what I’m talking about.

5:26
It is a parabolic chart going all the way back to 2009. This Market could give up 50%, in many cases And you probably would still have some stocks with some crazy valuations out there. I mean, look at Nvidia, when we’re talking about a, like, a PE ratio over 165 and their earnings.

5:44
Yes, I know. People like to talk about the AI. They like, to talk about BuyBacks and everything else. Most of these stocks that are reporting right now. They’re seeing declining sales. Apple. Declining sales yet. How far away are they from all-time Highs? But like I said, I started thinking about it back in 2018, when I saw the FED, just completely do a 180.

6:02
Now, if this was Greenspan In Greenspan would have saw it through and I was even a fan of Greenspan bokor hundred percent would of and now Jay Powell wants to talk about. Yeah, I’m going to be another Paul volcker and I’m going to continue to hike interest rates. Always not guys, as cowardly as it gets.

6:18
He’ll, he’ll say Paul volcker’s name, but he doesn’t really play it out. He’s okay with raising rates. As long as the stock market can handle its own and that stock market sell-off in 2022. You hear about Market crashes or you hear about Market Corrections, Always used to say, it’s the market, take the stairs up in the elevator down or the escalator up the elevator down last year.

6:40
It was the escalator down the elevator up. I mean, the rallies that you saw the dead cat Bounce has were insane. So you had 2018, then you had 20, 22 and 20 22 is remarkable because the covid self. I think that was like I’m probably saying everything’s 30% here, but that was that was a big 30% self or at least 25%.

6:58
Maybe I should have done the numbers before I did this podcast episode but the exact numbers Not what matters. It. What matters is that? It was a significant soul and it was in five weeks. You look at it, though, the sell-off really started late, February ended and late May, and what ended it.

7:13
I remember specifically, it was Sunday night Federal Reserve, they get together and they said, hey, you know what? We are cutting rates down to zero and we’re going to just inject the market with just tons of money. You might remember that 60 Minutes interview that Jay Powell did and he was like, yeah, we just added a lot of zeros to the balance sheet.

7:31
And then the market never looked back. I mean, you look at it from the dead bottom and March of 2020 who were finished the year and it was straight parabolic. And then we had a Congress that kept putting out the PPP and the in the white house as well, it takes, you know, the both houses of Congress and the president to put this stuff in motion.

7:49
But you have the ppp’s and a lot of that was fraudulent. People just lining their pockets with that stuff in the town that I live in. Everybody had a new boat all of a sudden. It was phenomenal. I mean, you could not find a boat in our town. Everybody bought a new freaking boat and then you had all the stimuli checks people rather than large.

8:05
There was no restaurants open. They were just pocketing. The money savings went through the roof before actually bringing down their credit card debt. I mean, I was actually, it may be a good thing that came out of it. But nonetheless, that’s why we have so much rampant inflation, the FED policy over the last ten plus years. Plus the fact that we were injecting so much money into the economy because we decided to shut it down.

8:25
So, then you had that rally 2020 2021 and then 2022. Yes. We sold off, you know, 20 +. But that wasn’t without its own questions either. I mean you saw some Raging Raging Market rallies. I mean, look at some of the rallies. You saw an apple Tesla, I mean these stocks almost went back to all-time highs during the middle of the 2022.

8:43
Scylla you look at stuff like healthcare and how well they held up in look at things like defense stocks they held up very well it was tech stocks first and foremost I got obliterated and your discretionary stocks but throughout that period of time you did have some significant rallies that could have been played to the long side.

9:01
Course, that brings us to 2023 were about four and a half months into it, and you’re just seeing a constant bid underneath the market. It was almost like, as soon as we had a bank failure, boom, it’s Off to the Races. We go much, much higher since then, and it’s fighting against those forces that want stocks higher and perpetually higher to never stop going higher.

9:21
That make sure Ting so much more difficult over the last five years than in any other time in my trading career. I mean, think about it. You see through sites like unusual whales, guys. And these people are exposing these congressmen and congresswomen that are trading off of Insider information.

9:37
Both Republican and Democrat with blatant, disregard for what anybody thinks they are Shameless and what they were doing. They are fleecing the people, the very people they put in office by using their office for monetary gain. Take a look at like, Tommy tuberville to senator, from Alabama.

9:54
Take a look at Nancy Pelosi. I mean, these people are absolutely benefiting from insider trading something that nobody else. Can do in the United States of America without going to jail. Just look at freaking Martha Stewart. Went to jail for insider trading. Nancy Pelosi.

10:12
She can walk into Wall Street and say I am insider trading and there’s not a darn thing that you can do about it and she’ll get away with it same with Tommy tuberville and all the other hosts, you know, me people got away with selling their Regional Bank stocks just the day before those Bank, stocks collapsed scores of Congress people men women, whatever scores of them and they get Away with it because it’s not illegal for them to insider trading and there’s actually I don’t even like AOC and I don’t like most politicians, I probably hate them all but actually agree with the ones that are trying to ban Congressional training because you got the Congress and you got Congress invested, we got the FED invested.

10:47
And I mean, look at how much Scandal was going on with the federal chair Governor’s. Shameless, they were selling stocks, knowing exactly what fed policy was going to be going forward, and 2020 and 2022. They knew it before. Anybody else did and they acted on it.

11:03
You try to get a sell-off and now you have the 0 DT e phenomenon that’s zero days to expiration call by and I’m not going to get into the intricacies of it. It’s very google-able. That’s even a word. You can look it up it’s there it’ll explain what I’m talking about is essentially people who are buying and selling options that expire the very day that they buy him.

11:25
Hi. Hi reprisals. The highest risks that makes GameStop look like a walk in the park but it’s creating a perfectly Hedged market. So you have that little gimmicky kind of thing going on in the market right now. And I think probably the only reason why 2022 didn’t play out more like 2018 where the market sells off, a couple months in the FED reverses policy is because inflation was the trump card.

11:45
You let inflation out of hand, you lose the currency, you lose the currency, you lose the country because without currency. What are you buying and selling at the stuff is going up in hyperinflation, type atmosphere, you don’t have anything. Look at Argentina, their interest rates are at 97% right now.

12:01
And they still can’t get inflation under control. And then you look at what we’ve talked about the monetary policy side stuff that the FED does. But look at the fiscal policy side, look what Congress and the president signing into law. Not just Democrats. But Republicans and Democrats together. I’m not talking about just, the, by an administration-wide Administration has plenty of blood on its hands.

12:19
And I’m not even trying to get political, I’m just trying to be honest with you, they’re spending fiends. You look at the Trump Administration spending fiends. I mean, who did the freaking PPP people the trillions of dollars there. This spending will prop the market higher. Look, what covid did for healthcare.

12:35
Look at moderna, look at Pfizer, look at Johnson & Johnson. Who stalks never pulled back because they were getting the government funding as soon as that stuff went away. They’ve pulled back. Look what defense does look how much the military industrial complex benefits off of the constant spending?

12:53
How can a defense company go down when there’s billions upon billions of dollars every year being injected into the It’s Industries Pockets. We’re starting Wars everywhere. We can think of. Yeah there’s a lot of spending going on and it’s not just these unique examples here but it’s just the amount of spinning spinning is up forty percent since 2020, since the covid thing started and we’re looking to increase spending again this year.

13:17
Am I missing something? Why are we spending 40 percent more? And this whole point of this pocket is not to talk politics. Yes, there’s a little bit of a gripe going on here. Okay, I get it. Like I said, I chose to do this when the whole show. Shorting is a little bit wrong to me right now because it has not been the most successful play for me this year.

13:36
Long term positions are doing great swing trading shorting, the market not doing great and that brings me back to the question that I wrote originally proposed is shorting day. We talk about 2020. We talk about 2018, we talked about 20, 22 and we talked about 20-23, we were talking about the market Rising right now with hopes, that the debt ceiling will be increased when it was never actually something we decrease.

13:59
Because there was actually a Your that happening. And so we try to assign these news stories to all these things. The fact is people were buying more people are buying than selling and I’d be remiss if I did not talk about the influence of the Fang. Stocks every day, you have a flavor of the day flavor of the day, a stock that from the Fang that’s going to lead today.

14:16
It was Tesla previous day. It was Googled, they laughter that was Amazon. But day before that it was Google again. I mean, you don’t need all the things stocks, go up. You just need one to be going up in massive amounts and it pulls the whole market up with it. The bigger the market cap. If it’s Apple even more amazing after Apple earnings Market, couldn’t go down that day.

14:33
It just kept going up. Google is at a 20% in the last seven, eight days, Nvidia has gone up like crazy. AMD is gone from the 60s to the 80s and two weeks. These big tech stocks, they add incredible influence to the market.

14:49
People get scared. And instead of going to cash, there’s this flight to Big Tech even with crazy valuations like what we’re seeing in Invidia, like what we’re seeing with Tesla, you’re Evaluations with them. Crazy high people will go to them. He will go on to Apple and Amazon.

15:05
And at props, these stocks up there, because they’re so big and because it pops them up, it pops, the entire market. So we do this flight to safety and two big tech stocks only for the market dot to go down because we’re fleeing into the arms and to the comfort of big Tech because they’re so big. The market can’t go down.

15:21
One of the best examples was yesterday. You have four, two one – breath you had 75 out of 100 stocks on the NASDAQ 100 trading lower substantially lower even. And What did the nasdaq-100 do? It went higher on the day higher. You couldn’t ask for Worse, breath, than what we got yesterday.

15:37
If you saw the market internals and you judge what the market is doing, based off of its internals based off of what the fix was doing based off of what the tick readings are doing based off of what the advanced and decliner ratios were, you would assume we were down one and a half to two percent across the board. And that was not the case. And that is because of the Fang stocks, and how much of a role they play.

15:53
And, by the way, you want something to help you out, check out swingtradingthestockmarket.com. I got to plug this every time guys, and since we what swingtradingthestockmarket.com is It’s my research service that you can access through this podcast, you’re going to get all my stock market research each and every day that’s going to include Market updates updates on all the things stocks and my daily and weekly watchlist.

16:12
So it’s a really cool. Some really good videos that I send out there to everybody and you’re supporting the podcast and the process. So what do we do? So, what do we do here and also, what am I drinking? Drinking Redwood Empire is pretty good. I don’t think it’s my favorite but it’s not bad. Redwood Empire. I don’t know.

16:27
I don’t remember what I judged it. The first time it’s probably somewhere in the mid Yes, it’s not bad. It’s got a good flavor though. But what do we do? What do we do with the stock market going forward? There’s really three things that you can do in the stock market. You can be bullish by buying stocks, you can be bearish by shorting stocks or you can be in cash and then essentially being indifferent towards the market, those are the three variables and so deciding, whether it be bullish, cash, bearish, or a mixture of something in between is actually difficult because you’re trying to balance three different variables.

16:56
You know. It’s like trying, it’s the difference between trying to juggle three balls versus two balls, right? I can Will two balls off all day. Oh man, I don’t like where this is going. Bowling ball pens, I can juggle two bowling ball pens all day long. I will say it that way. I can. Juggle two bowling ball pens all day long.

17:13
You give me a third bowling ball pen to juggle. I cannot juggle three, bowling ball pens. At the same time, I will drop all three of them. And I’m not saying that there’s an exact correlation between bowling ball pens and the variable is of what you can do in the stock market between buying going long going.

17:31
A short or being in cash, not saying that. When I am trying to say is this, that, often times more variables that you inject into your trading, the more difficult, it can be, and it’s just like with charting, right? The more indicators you put on the chart, the more difficult it’s going to become. This is the worst thing.

17:46
If instead of making your options being long, being short or being cash, you decide to be either bullish and or be cash in the balance between the two is determining how bullish or how bearish you are on the market. If you’re 100 percent cash, you’re probably going to be bearish on the If you’re 100% long, you’re very bullish on the market.

18:04
And then, the some whatever it is in between is a mixture of that combination of extremes. So my point with this podcast is not to say that you should never short again. And I’m not saying that I will never short again and I realized by doing this podcast after the markets made a run up, maybe, maybe the high was yesterday and an eminent sell-off is on the way.

18:22
And again, like I said, I hope it is. But if you look at how I did in 2022, I definitely had more success shorting the market than going long. I didn’t not ever go long. On the market during 2022 but oftentimes because when the market did start balancing, I was more or less looking to cover my positions rather than a get long I missed out on some of those good runs in the market.

18:41
So, what I would say about 20, 22 is essentially that there was probably plenty of gains to be made to the long side, just playing off of those dead cat Bounce has, and I think, especially if you’re new to trading, it may make more sense to just use those two variables cash, or going long on stocks and just completely eliminate the short side of the trade, not saying that you can’t ever goes.

19:01
And I’m not saying that I’ll never go short again more than likely, I will go short again at some point, but when we consider the question is shorting dead. I think the way that the market has evolved over the years where you have Congress padding, their bank account with their Insider information, the FED doing the same thing with retail being so much more involved.

19:19
Now that commissions are not at something to have to deal with. Remember back in the day, I was paying twenty dollar commissions. That is not the case. Now it’s free commissions and with just the rampant spending that’s has no end in sight. All we ever really looking at an extended sell-off that That might be something similar to what we saw in 2000.

19:37
I mean, we haven’t seen a two-year sell-off since the 2000.com bubble. That was the last time we sold out for three years in a row. But as you go forward, ask yourself these questions. It’s okay to ask yourself these these questions. I know I’m doing it a lot right now because I am frustrated with the market.

19:53
I think there’s been every reason for the market to go down from a technical and from a fundamental standpoint and I don’t even consider myself a fundamental traitor, but even from a technical standpoint, there’s been some amazing breakdowns only for them to actually get bought up immediately the next day, you Get two days of selling in this market, it’s impressive.

20:03
So if you’re frustrated by the marketer frustrated by what you’re seeing, maybe going forward, it may be easier to Simply go more cash when the market starts to sell off and that’s almost your short position. You’re essentially saving money, preserving Capital, by letting the market Fall, and then playing those dead cat Bounce has.

20:19
And then when the market does bottom, you’re getting in at a much lower price than say, somebody who’s been shorting all along and then when that day, cat bounce arise, they’re spending their time, getting out of positions rather than getting into new positions to the long side. If you enjoyed this podcast, this was a little bit of a heavy one. I would encourage you to leave me a five star review, keep sending your questions.

20:37
ryan@shareplanner.com and leave me a review. I would love to hear what you guys have to say, swear. I’m not losing my mind, but I do like, to be honest with you guys, I like that for somebody who’s been doing it for a long time, it’s been kind of a frustrating, couple months in the stock market, but I think it’s good to be honest and transparent.

20:54
I mean, I probably outside of my wife and my kids. I probably talk to you guys more than anything. So it’s it’s good to have a little bit of an outlet. For may just be able to talk to you guys and tell you what I’m thinking. Because you guys, if you’re trading on a regular basis like myself, you know, the frustrations, you know, the problems, you know, if you’re making money this year, there’s a good chance you weren’t making money last year.

21:12
And if you’re making money last year, there’s a good chance. You’re not making money this year and the frustrations that come with the markets, very real. So, I hope you guys didn’t mind me pour a little bit of my heart out to you guys tonight, but I wanted to get that off. My chest is shorting dead. And I think for all of us, that’s probably a personal question that we have to answer for ourselves and how we we’re able to manage the Ebbs and flows of the stock market on a daily basis.

21:34
Again, he send me your questions, check out swingtradingthestockmarket.com, leave me if I start with you. Thank you and God bless. Thanks for listening to my podcast. Swing trading the stock market. I like to encourage you to join me in the SharePlanner trading block, where I navigate the stock market.

21:50
Each day with Traders from around the world with your membership, you will get a 7-Day trial and access to my trading room including alerts via text email and WhatsApp. So go ahead Sign up by going to the shareplanner.com trading block, that’s www.shareplanner.com/trading-block.

22:08
And follow me on SharePlanners Twitter, Instagram, and Facebook, where I provide unique market and trading information. Every day you have any questions, please feel free to email me at ryan@shareplanner.com all the best to you and I look forward to creating with you soon.