Swing Trading vs Long Term Investing | Podcast Episode #336

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.

0:33
Is today’s episode, we’re going to talk about swing. Training versus long-term investing. Why do I like swing trading so much more than long-term investing? Well, spoiler alert. I actually like long-term investing to. I feel like swing trading is more along my Niche. That’s the thing that I excel at the most, but I still do long-term investing.

0:49
I think that it’s still important ones trading to be able to do long-term investing side by side with their swing trade in today’s email. For this podcast, episode comes from a guy, we’re going to give him a good floor to read. Nickname, of Jimbo, Jimbo rights. Hey, Ryan, hope you are doing well.

1:05
I I have a personal question, but I was wondering if you could talk on your podcast about why you prefer swing trading over-investing. I know that you have mentioned the difference before and that you have an investing and a swing trading account. However, I haven’t heard you going to death about the advantages of Swing trading over-investing, you don’t have to mention me personally on the episode, just curious to hear your thoughts.

1:25
Kind regards Jimbo. I don’t mention you by name. So, I guess that’s why I give you the order. Redneck name of Jimbo’s so quick. Understand the difference between swing trading and Long-term investing on the surface level long-term investing. You’re talking about holding stocks for typically, more than a year and then selling them at some point, far down the road.

1:43
You’re holding through earnings, you’re holding through a lot of different things. It’s a stock typically that you believe in the long-term sustainability and the potential future growth of that company, whereas swing trading, you may not always believe that there’s a really good story behind the stock or that there’s a long-term potential to the stock.

1:58
But you do think that there is a short term momentum opportunity for you to take advantage of and with swing trading allows you to do. Long-term investing not so much because over the course of the year, you may finally realize, oh, man, you know, that momentum that I originally got into that long-term investment for that was done.

2:14
And over with 11 months ago, I should have gotten out then and now I’m looking at a 50% loss. I think the stocks that you choose and the methods that you go about with swing trading versus long-term investing or drastically different. And so those differences is why I do prefer swing trading over long-term, investing, do I necessarily look down on people who choose long-term investing over?

2:35
Swing trading no, not at all. I think a lot of it comes down to personality and your style of trading / investing and what suits you the best for your lifestyle for the person that you are and for your financial goals. And so digging further into why I like swing trading so much over long term investing is because it goes probably back to the 90s.

2:53
When I first started off, I was 11 years old. I had gone a, you know, a few thousand dollars from an inheritance that this lady that raised my mom down the street of Miami, she gave us a nice inheritance for college, but because I was Result. My dad thought, hey, you know what, we’re going to stick this in the stock market and let it grow for you over the time.

3:10
Now, this was the 90s, the 90s was the.com era. If you’re wondering what that’s like. Look at what the markets like today with the AI Mania with artificial intelligence be in all the rage companies talk about do an AI on their products, the stock Source, all they have to do an earnings call as say Ai and typically it goes a higher.

3:29
You look at Adobe. Look at AMD. Look at Nvidia, Google. Microsoft did I say Nvidia? I don’t know. But Vidya is kind of a no-brainer. These companies are definitely focused on AI and that is what wall Street’s focused on and you’re seeing stocks make incredible rise.

3:45
I think in video loans is like up almost two hundred percent on the year and we’re not even halfway done with the year. And that’s what it was like back in the 90s, probably even more. So, in the 90s and perhaps, the AI crazy eventually Takes Over The Craze that we saw in the 90s with the.com. Boom, but literally over the in the 90s, when companies would come onto their earnings, Can’t say hey we’re going to have a website with a.com at the end of it stock would go crazy.

4:11
That was the big rage and when you think about some of the Titans that came out of that like Jeff Bezos, he came out of that 90s ERA with Amazon and so you if you had a website and you had a.com stock market loved you and it sounds ridiculous in hindsight. But think about how like stupid some of the things that we look back on like the in FTS like some of the Crazy Prices that those things were going for or or the metaverse.

4:35
I know that’s still kind of evolving and it maybe it’ll take a different shape and form, but we were really getting cranked up about the metaphors and probably the same thing with AI. We’re going to look back and he’ll absolutely crazy. It was how much valuation we are giving attributing to some of these companies. So, going back to the 90s, that was where I got, my start was during the 90s.

4:52
Boom. And what a time to be alive. I mean, I think I saw that small investment go up to like, fifty thousand dollars by the time I was 18 or 19 years old and then the.com bubble burst a couple years later and I saw it come all Crashing down and I walked away with still more than my original investment.

5:09
But far off of what those highs were that, I had at one point in time. Thankfully, I pay for a transmission on my Oldsmobile and I, let’s see what else did I pay for? I bought a Gateway computer for college. That was pretty cool. And that’s where I got my start. The crash from 2000 to 2003, really shaped my view, and really drew me to swing trading, because the very fact that I realized, I needed to start managing the risk better because I didn’t want to go through Through that huge wave and huge crash.

5:37
That happened there. That was very frustrating. So I go into swing trade. Probably demon has signed the name swing trading to it at the time. It was just more of a short-term style of trading versus long-term trading that I was pursuing instead of just writing the Ebbs and flows of the stock market.

5:53
So then, that’s where risk management started to come into play. I realized I needed to have stop losses. I needed to have something in place to guard, myself against these huge Market crashes. I wanted to walk away with The Lion’s, Share the meat and potatoes. Like I talked about, in the last podcast, I wanted to walk away with the meat and potatoes, The Lion’s Share of those profits and not watch them, just get squandered away.

6:16
And there’s gonna be a lot of people in this hype that we have seen so far here in 2023, that they’re going to look back. And maybe they’ll even look back on this Pockets, like, man, I really should have listened to what he was saying, because I actually saw all the prophets in my portfolio, completely disappear over time, because the market did eventually pull back markets.

6:32
Pull back over time. They will pull back. We saw it in 2022. There’s a good chance we see at some point in 2023, so being able to maximize my short-term returns and not have to give back so much. Oftentimes, you hear that saying? Two steps forward one step back. That’s what long-term investing can oftentimes be and I was wanting to avoid that.

6:50
One step I’d rather take two steps. Get out of the trade, let the market, take that one step, get back in again on the next trade. That is one of the many reasons why I like swing trading. The other one is the visual aspect to using technical analysis. Fundamental analysis isn’t as important in swing trading as Nicole analysis has technical analysis is really what guides all of my trades and it’s a visual concept that allows me to have an edge against Wall Street where Wall Street focuses more on fundamentals.

7:16
Wall Street will have an entire staff of people dedicated to analyzing stocks analyzing their books, talking to the CEOs, talking the cfo’s talking to ctOS. I don’t have that. Neither, do you more than likely you don’t? Okay. Maybe if it’s a family member or somebody else, but more than likely the comment Average, Joe does not have access to the Kind of information that Wall Street has when it comes to fundamental analysis.

7:38
But on technical analysis, it’s available to all you can become skilled at price and volume to be able to see exactly what’s on the chart and what it’s telling you, yes, you’re going to be right at times. You’re going to be wrong at times, that’s okay. Being wrong. Is the cost of doing business, but overall trying to avoid as much of that one, step back and maximizing, the two steps forward and swing trading, that’s where you become profitable as a traitor.

7:59
And so the visual aspect of being able to put myself at a Or a playing field that allows me to compete with Wall Street is ideal because I’m never going to be able to keep up with their algorithms, their machines that are buying. It’s I can’t keep up with that.

8:15
But I can’t have an edge of my own that revolves around technical analysis. And that’s why you see so many people that are successful, swing Traders, using technical analysis, and really not paying much attention to fundamental analysis. And I’ll say this, I think a lot of the traders that you see, they’re buying like three and four dollar stocks.

8:31
They’re not paying attention much to the technicals, but they are heavily focused. On the fundamentals as if they have some kind of edge there. And most of them blow up their accounts or blow up those traits by focusing too, heavy on the fundamental analysis. On these very sketchy, very iffy companies that they believe in the story on but they haven’t seen price match.

8:51
What they believe the fundamental should do. And sometimes that doesn’t always happen. Sometimes that story that you believe in doesn’t come to fruition when it comes to long-term investing in the stock market or even swing trading, the stock market, based off of fundamentals. And so, they’ll believe in the story and they’ll get right into it and Stock doesn’t do anything and they get frustrated after a couple of weeks that stock hasn’t moved in their favor.

9:10
Well, why’d you get in at that point? You use fundamentals acting like they’re going to act as technicals when you get into the trade, like all of a sudden because of you realized it all of a sudden, the price is going to take off and sympathy with what you believe in, and that just doesn’t happen. And so people end up losing money because these lower dollar price stocks are so much cheaper.

9:27
I also like swing trading because it allows you to profit in all types of markets. 2022 is a perfect example of that. You had the market pulled back over 20% and yet, I was actually able to profit in the market that year and make a good profit, but long-term investing that’s much more difficult. You would have had to have been in like a like some insurance companies and and some of the health care companies and some of the defense companies to have made a profit in 2022.

9:49
But if you were doing all big tech stocks, you didn’t make a profit. You got your head handed to you and you’re still trying to probably recover from those losses because long-term investing doesn’t allow you to profit in all types of markets. Bear markets are very difficult to profit in as a long-term investor.

10:05
You have to Be in the right stocks at the right time. Swing trading, not only allows you to avoid right in the way of lower. It allows you to profit from the wave lower. You can also short stocks during this time. So, swing trading allows you to play both sides of the market long term investing that’s much more difficult.

10:20
Doesn’t mean that people don’t short stocks from a long-term investment, but you also have to deal with the interest rates because you’re borrowing for a longer period of time, hoping to get a sizable return in the stock, it’s not like a stock that can go up one or two hundred percent over the years. If you’re shorting a stock from a long-term perspective, If you can only get it to go down to zero and that’s pretty hard to do to nail those companies that are going to go straight to zero and the further it goes down.

10:43
The less of a percentage return that you’re going to get for every 1% additional drop out of a stock. It keeps getting smaller and smaller in terms of a dollar each, which means those margin rates are going to cut into your profits, more and more the longer you hold onto the straights. And so, if you hold it over the course of a year, and it was a successful short trade, it’s still likely to be grossly impacted by margin rates.

11:03
Also, say this about long-term investing. I Often times people tend to panic sell at the bottom and get back into the market at the top. I’ve seen it over the years, whether it was when I was in Corporate America and I was watching people panic cell during major recessions or whether it was getting back into the market because they thought the worst was behind them only to find out that they got back in at the top.

11:25
Usually your long-term investors your 401k people and the 403 bees and all those people people who have these passive long-term accounts, they love it when the markets going up there talking about it at cocktail parties. These and everything else they loved it. But then when the crap hits the fan and things start to pull back some here, then they start to get nervous.

11:44
They start to see their accounts go by 10%. Okay. Okay. It’s just a pullback pullback will be able to ride this out, then it goes down 20% and then 30% of them forty percent. And then they start to really panic. And then I can’t afford for this whole thing to go. Belly up on me, it, get out at 50% down or 40% down and then they see that bottom kick right in and it goes right back up.

12:02
How many people in 2022? Got out of the market. October because they couldn’t take anymore of the pain, they probably read how October is such a bearish month of the year or whatever. And it’s really not, but they hear about how crazy October is, which it’s really not. But a lot of people believe it is because you’ve had some major Market crashes during that month over the course of history, but they’ll get out and then they see it go right back up.

12:26
And now they’re looking, you know, they got out of AMD and in the 50s and now they’re seeing it. 120 like, why did I ever get out of it? And so they’re kicking themselves and then they feel like the stock market is rigged. That’s because oftentimes long-term investing. We all consider ourselves long-term investors until a recession hits or a major Market pullback or correction hit and all of a sudden we want to become swing Traders and then we’re finding ourselves getting out at the worst possible time because we didn’t plan it as a swing trade, we didn’t plan to manage the risk in that way.

12:52
And now we’re trying to all of a sudden do all that and it’s leading to getting out as some of the worst possible times imaginable. I think one of the things that you’re seeing right now in the stock market, you’re seeing this huge wave of Traders. Just they’re buying up the airlines are buying up the cruise line. Streak. They’re buying up these things as fast as possible.

13:07
And often times, I think that goes back to sell off in 2020 when they saw the market completely collapse within a four or five week period, only to have this v-shaped bottom, that’s all stocks, like, rclc CL, American Airlines AAL, and gosh.

13:23
All of those. All those companies that got hit really hard in the tanked, they took off and of people made a lot of money off of them. Now, they’re thinking to themselves. Oh crap. The markets going right back up again. I’m going to miss out if I don’t get a now. So there’s A lot of retail, there’s a lot of fomo chasing this market now, but you know, want to know what doesn’t panic, swing trading.

13:41
The stock market.com. There, you can get all of my stock market research each and every day, really cool. If you’re watching this on YouTube you can just find out more about it by clicking on the join button down below on Spotify or any other platform. Go to swingtradingthestockmarket.com.

13:57
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14:12
swingtradingthestockmarket.com, I dig into the technicals a lot more using charts and graphs as well. So there is some things about Long-term investing that I like over swing training. So I didn’t want to just bash on long-term investing because like I said, I do long term investing.

14:28
I like it a lot, but I keep them in separate account because I don’t want the emotions that might come about from swing trading on a bad day. Start to infect my long-term investing because there’s times where my swing training is way up. In my long term investing is way down on the day, and it can be exact opposites where my swing trading is down in my long-term.

14:48
Investing is up on the day, but if I see my All countdown, but I had a really good swing trading day. I don’t want that to affect my decision, making on my swing trading and vice versa because if I mess it all together, there’s a very good chance that what’s happening with my long-term Investments could affect my decision making with my swing trading Investments and I don’t want that.

15:08
I don’t have to look at my long-term Investments each and every day, but with my swing trades, I do. And so that’s one of the benefits to long-term investing is that you can have more V hands-off approach. But with that being said, there’s a Out of Home, Run hitting that tries to take place and long-term investing where people will try to buy these low dollar stocks that end.

15:28
They will buy into these like Concepts like right now, it’s AI. But was it a couple years ago, it was all about the Eevee’s. The electric vehicles, people missed out on a Tesla run. So they started looking at Rivia nor ivn and El Cid and all these other ones and a lot of them had major, major declines and people ended up becoming bag holders as a result of them.

15:49
And for me, when it comes to long-term, That’s what I like to do is focus on the stocks that are seeing that are very reputable but are seeing major pullbacks. And when they’re starting to see, major pullbacks, like if you see apple with a major pullback or Amazon and you got that in 2022 and Google and Microsoft, well, you know those companies aren’t going anywhere anytime soon.

16:08
Yes, there may be a day where the sun doesn’t shine on them anymore. But at this moment there are some of the most reputable companies out there. There’s some of the safest Ones based on what we currently know at least. And so those are the stocks that I’m going to go after on a significant Market. Back, because when the market does bounce back, those are likely to follow as well and that’s exactly what we’ve seen here.

16:27
So far in 2023. They have not only just bounced back, but they have led the way in overtime. I do like to raise cash my long-term portfolio, because when the market does pull back, I’ve want to be able to take advantage of those pullback opportunities that the market affords us with if there’s a 33% pullback and apple, I would like to be able to pounce on that, especially if the technicals of the market are extremely oversold.

16:49
That suggests that the market balance is imminent. And one of the things too that you have to be careful of when it comes to long-term, investing is the earnings disasters. We’ve seen with big-name companies here over the past year, whether it was meta, whether it was Netflix or Amazon, you seen some big big earnings disasters over the course of time, so that can hit you because you can’t have a long-term investment that goes beyond one year unless you were holding it through earnings.

17:14
And so, that’s the downside of long-term investing. And it’s also why I don’t really speculate too much of my long-term investing with small companies because the Risk is not worth it. I don’t really want to wake up to a stock that’s down 75% because of a huge earnings Miss doesn’t mean that it can’t happen with a big company but it’s probably less likely to happen with an apple than it is with a ribbon or another smaller company but in the end, they’re both good strategies.

17:37
They’re both good approaches. They’re going to be more suitable for some people than others. Not, everybody can be a swing trade or not. Everybody is going to do well with long-term investing. Some people may just want to put it in spy and walk away, and that’s fine too. But for me, I Like to Swing trading over the long term. And I think it’s the best way to go about things.

17:53
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18:12
Keep sending me your emails. ryan@shareplanner.com, I read them all. I really want to make an episode out of every one of your questions. So keep sending on my way, you’ll be surprised at the percentage of people that get an episode. Done for them. When they send me an email, thank you guys and God bless. Thanks for listening to my podcast.

18:29
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18:45
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19:01
Please feel free to email me at ryan@shareplanner.com all the best to you and I look forward to trading with you soon.