Starting All Over | Podcast Episode #442

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.

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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.

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You can succeed at the stock market, and I’m ready to show you how. Hey everybody, this is Ryan Mallory with shareplanner.com’s Swing Trading the Stock Market, and today’s episode we’re going to talk about starting all over. That is never a good place to be as a trader.

0:44
In this case, this is a person starting over in life looking for a way to extract money out of the stock market for the benefit of himself.

0:52
Obviously, that’s what we really all trade for benefit of our self or for the family. But essentially this guy is going from one career that he no longer is a part of and to a completely different one.

1:02
So he’s starting all over and he has some questions and I think they’re good questions.

1:07
I think they’re very insightful questions. He tells me his back story, which I’m really appreciative of.

1:12
And so there’s going to be a lot to cover here. I’m excited about it.

1:15
I got a lot to say about everything that he’s written me about South for today’s episode. Usually I give a Florida redneck name being I’m from Florida, I was born and raised in Florida and grew up around some redneck culture. So usually I give people a redneck name, but I’m going to stray a little bit from the normal of what I usually do.

1:33
And this guy’s a truck driver, formerly a truck driver, and I’m going to give him the name Lincoln Hawk.

1:42
You guys remember some classic 80 movies.

1:47
You remember that Lincoln Hawk was played by Sylvester Stallone in the movie Over the Top. Now I was wondering if I just wanted to go with Lincoln Hawk where I wanted to go with maybe like Bob Bowl Hurley or Big Bill Larson or perhaps Smasher or Grizzly or Mad Dog Madison. But I went with the the main character Lincoln Hawk and it was a great movie.

2:11
It’s about a truck driver who goes from town to town doing arm wrestling and he’s fighting for his son and in the process from his ex-wife.

2:19
It’s a good movie, you should definitely check it out if you haven’t heard it. But anyways, Lincoln Hawk, I don’t want to get too sidetracked here.

2:25
Lincoln Hawk writes I Ryan I am very interested in learning swing trading but not in the sense of day trading. I am looking for a low risk long term swing trading if there is such a thing. I am 57 years old and injured. Hard work in a motorcycle accident did it to me and COVID put me out of business of 18 years in my trucking company.

2:44
Thank you China. I lost millions, my only investment was me and me ain’t so good anymore.

2:50
I walked away with $1.5 million in a commercial building I own outright because I don’t believe in debt.

2:56
My investment advisors, Edward Jones and my bank failed me. If you want something done right, you got to do it yourself, right?

3:02
I need the basics and an understanding of trading of which I know nothing about what to invest in, companies, mutual funds, dividends.

3:09
I am not looking to gamble my money away. Is there a low risk trading and stuff like gross stocks?

3:15
Thank you for your time, Lincoln Hawk.

3:21
All right, so lots to cover. Like I said, the guy starting all over from a career standpoint, he’s not able to do probably what he loves doing.

3:27
He had a trucking business for 18 years. COVID put him out of business, but he still walked away with some money, $1.5 million.

3:34
And he has a commercial building, which I’m sure can fetch a pretty penny as well. But again, you, you look at society today and you’re not able to survive as well with even a one and a half million dollars.

3:44
I mean, you can burn through that pretty quickly.

3:48
I look through my own personal budget and it’s crazy for a family of five how much money we spend on groceries alone per week.

3:57
A trip to Costco. We make a trip to Costco every week.

4:00
I’ve gotten off the hot dogs and Mountain Dew that is at least $300.00 every time we go. And then there’s a trip to, especially if I go, sometimes my wife gets it down to 200 if I’m not there with her.

4:13
But if I go, man, I can’t get out of that dessert. I’ll save my life.

4:16
But she’s usually a lot better about it than I am when when she goes by herself.

4:22
But if I go to Publix, that’s what we have down here in the South. That’s another 150 to $200 right there.

4:28
So you’re talking about $500 a week now. We pretty much eat in all the time.

4:31
I used to eat out a lot. I don’t anymore just because eating stinks.

4:35
I mean no offense to the restaurant owners listening to this, but a lot of the restaurants out there nowadays, they they are using awful, awful contents.

4:43
I would rather pay more for a better final product than I would to pay less and I feel sick afterwards.

4:49
But anyways, I don’t want to go off on these tangents here. I’m trying not to do that.

4:53
What Lincoln Hawk ultimately wants to do here is to switch careers completely cold Turkey. He’s going from trucking, which is almost, I’ve had a few truckers write the show in the past and they they talk about how difficult it is to trade and drive a truck at the same time.

5:03
Really probably shouldn’t be doing that. Maybe pull over at a rest area.

5:09
But that’s one of the careers that it’s very difficult. You do have downtime and I get that. But also when you’re on the highway during the day, it’s kind of hard to be glued to your monitor.

5:20
But now he’s pulling away from he’s doing, he’s wanting to get into swing trading. And you can tell he’s pretty new at this just by some of the terminology that he uses.

5:28
He says, I’m interested in learning swing trading, but not in the sense of day trading. Never really heard it put that way, but I get what he’s saying.

5:34
He’s he’s wanting to make trades. He’s not necessarily wanting to hold a stock for years on end, but he’s also not wanting to, you know, make 15 trades in a single day either.

5:42
So he’s trying to find that middle ground, which obviously is swing trading.

5:48
One of the things that I got a lot lot to cover. But one of the first points that I want to make here is that this guy has had, at 57 years old, some pretty rough experiences.

5:55
He’s put a lot of wear and tear on his body from the work that he’s been in.

6:01
He’s been in a motorcycle accident. He’s lost his business and he’s lost millions as a result.

6:06
He says it right there. I lost millions.

6:08
And so that that can do something to you that could be very defeating. I know there’s been times in my own life where I have experienced a lot of loss from from different things that I’ve gone through.

6:18
I’ve gone through a divorce that was painful that that feels like you belt lose everything right there going through a divorce.

6:24
I remember a few years after I got out of college, a friend of mine wanted to build a house with me and we were basically like the general contractors on the House.

6:30
We built it all ourselves. Like I didn’t like actually do the nailing in the painting and all that stuff. I mean, we did a lot of painting, but we didn’t actually build, build the house we had, we contracted it out to people, but we’re overseeing the whole house process.

6:43
And so we bought a piece of property that it’s probably worth like $3000 just five years earlier.

6:53
And during the real estate bubble back in the in the mid 2000s, that piece of property, I think we ended up buying for 59,000 or something crazy.

7:02
And it’s probably higher than that now in today’s housing. I’m quite sure that it is, but I remember each one of us lost like $25,000.

7:12
Now, some of you might be saying that’s not that much money, but when you’re fresh out of college, that’s a lot of money.

7:16
That’s a whole lot of money and you feel like you’re broke afterwards. And so I’m not trying to compare my $25,000 to to his, but I, I do know a thing or two about experiencing loss and coming back from it.

7:26
And one of my favorite movies of all time is The Natural. You have a main character, his name is Roy Hobbs. He’s an old guy. He’s finally getting a shot at the majors. They’re not playing him at all.

7:35
And his team’s just losing. I think this team’s called the New York Knights and they’re losing every single game.

7:44
And so they bring in a motivational like speaker, psychologist. And it’s that that scene has always stuck with me because I think there’s a lot of truth in it.

7:52
And the guy starts, he has a very nasally voice. He’s like the mind is a strange thing. We must begin by asking it What is losing?

7:59
Losing is a disease as contagious as polio.

8:05
And then they go to a cutscene of them losing another game, and then they come back to him. He says losing is a disease as contagious as syphilis.

8:13
Then they go to another scene. Losing is a disease as contagious as bubonic plague. And it’s starting to go into Kermit the frog mode there.

8:26
But it is attacking one but infecting all are but curable. But OK, so that was the line. You talk about all the diseases that losing is like — polio, syphilis, bubonic plague — and there’s some truth to that.

8:40
And the reason why I say that is that when you when you’ve experienced hardship, when you’ve lost something in life, it carries over into other areas of life that are completely unrelated.

8:52
One thing, and I I don’t know if I’m getting too personal here, but one of the things that I know that I’ve seen being married again — and I’m in a wonderful marriage.

9:00
I love my wife to pieces. But there’s things that can happen in your marriage that the person didn’t do anything wrong, but it it can harken to your mind back to the days of old when there were times in your other marriage where things were not right.

9:15
And it can cause a reaction out of you that isn’t fair to the other person or it’s it’s infecting your mind and impacting your current relationship.

9:25
Now again, I I have a great relationship with my wife. I don’t think we ever even argue.

9:31
But it’s a it’s a good example how things from the past can trigger you into a response that can surprise you and is not warranted in a new relationship.

9:42
So the reason why I bring that up is because this guy’s lost millions. He’s come away with far less in life than what he expected he would walk away with, with his 18-year business in the trucking industry.

9:51
He had a thing like COVID that came along that no one’s ever experienced before where people were forced to shut down.

9:59
And now he’s trying to get into something completely different that he never even imagined he’d have to do.

10:05
So the potential there to lose money — and it may not even be a lot of money.

10:11
He may have a just a standard old trade that he takes on. Maybe the trade goes against him when it was going for him or maybe he misplaces a stop loss and he loses more money than what he expected.

10:19
But again, it’s not a a showstopper.

10:23
It’s not a killer to his portfolio, but it was a mistake and he lost a little bit extra money. It can trigger you because of the experiences that you went through in the past.

10:33
You can say, oh, great, I’m going to blow it all on this one too, just like I blew it in in my other career.

10:38
And I’m not saying for sure that this is where Lincoln Hawk is at in life. Lincoln Hawk might have, you know, come to grips with with what happened and he’s he’s ready to move on to the next chapter and what what happened to him in the past is not going to happen to him in the future.

10:50
But for a lot of people, that is true. You’ll carry over those experiences, unrelated experiences, and they can impact you.

10:57
Just like what I was saying with my wife, she can say, hey, let’s have spaghetti tonight. And I’m like triggered because my ex-wife made the absolute worst spaghetti known to man.

11:06
And so it’s something as silly as that can plague you in a completely different area of life. And so with Lincoln here, he’s got to make sure that when he is trading that he can keep separated the experiences of his past of losing money there from the experiences of trading, which he’s bound to lose money.

11:29
I lose money all the time in trading, but over the long haul, my profits outpace my losses.

11:41
And so that’s what he has to make sure that he does as well, that he doesn’t let his, you know, a loss here and a loss there overshadow the fact that he’s becoming a better swing trader.

11:47
And so he has yet to start. So there’s a lot of education, but he asks me a very interesting question is too is, is there a low risk trading and growth stocks?

11:54
And risk is really what you make of it. I think trading Apple can be risky if you don’t trade it right.

12:00
NVIDIA, which has been on one of the greatest runs of all time, can be risky if you don’t know what you’re doing or if you don’t trade it right.

12:06
You look at the earnings here just this past week and NVIDIA, everybody was buying the 131 options. Tons of people.

12:15
People were expecting a 17% move, pricing in a 17% move on option straddles. That is a massive, massive amount of premium to pay for NVIDIA, I think NVIDIA.

12:30
So NVIDIA was trading. I can’t even remember what it was trading at prior earnings. It was like 125 or 126, maybe a little bit higher, but people were paying gobs of money to play these straddles.

12:41
I think it came out to some $2000 to play straddle on NVIDIA. Now the people who were expecting a big move lost a lot because guess what?

12:52
Their options never got into the money. They never recovered the premiums that they paid for that stock.

12:57
So as a result, they lost all of their premium and the shares because these contracts were all expiring 3 days later.

13:04
So NVIDIA, one of the most successful stock stories that I’ve seen in in years, biggest company of all time also can ruin a portfolio.

13:13
Is it a growth stock? Yes.

13:15
Is it a very successful growth stock? Yes.

13:17
Can you lose a lot of money on it? Absolutely.

13:19
So risk is really how you design it. And I’m going to give you a couple of things to think about.

13:24
And the first one is position sizing. And position sizing, in the case of something goes wrong, why do we position size?

13:30
Because we don’t want to put 100% on one position and you wake up the next day like what we saw recently with SMCI and all of a sudden the stock’s trading 25% lower, you just lost 25% of your account.

13:42
Congratulations. If you’re putting it all on options, you just lost probably your entire account.

13:46
But position sizing is important because if you do happen to trade a stock that goes completely against you, then you’re positioned in such a way to where you can absorb those losses to where it doesn’t end you.

13:53
Any trade that I get into, if I get into a stock and the next day they announce that they are no longer going to operate as a business and the stock goes down to zero. Can I survive?

14:09
Absolutely. I can because I’m only putting about 12% of my capital on a single trade.

14:15
But if I was putting 100%, no, I’d be blown up. Would a 12% suck? Absolutely. It would suck.

14:20
I wouldn’t want to be taken out down to zero and take a 12% hit. Absolutely not.

14:26
So we use position sizing to prevent that from happening. Another element in which we can shape risk in our favor is through our stop losses.

14:35
We use stop losses to keep the losses on our positions even smaller. So we define the position, then we define the losses on those positions.

14:43
Yes, a stock can have horrible news and it goes way beyond your stop loss. But assuming that doesn’t happen, let’s get stopped out at a level that we define, not at the level that the market defines for us, because we’re going to use stop losses to keep losses even smaller than the manner in which we manage our position sizes.

15:01
Position sizes keep us from catastrophe. Stop losses keep us from having small losses turn into big losses.

15:07
We want to keep the losses even smaller and then the types of stocks will reduce the risk and the names that we trade.

15:15
For instance, I don’t trade small dollar biotech stocks. I hate those things.

15:21
You get one FDA decision that you didn’t even know was coming out, comes out and you could be ruined.

15:25
So I stay away from biotech stocks. I stay away from VIX-related products.

15:29
A lot of people like those things. They trade S VIX right now and I think people are horribly offsides on that trade and they’re going to have a penalty to pay in the future for it.

15:34
But I don’t trade VIX-related products. I think that’s one of the best guaranteed ways to destroy your portfolio.

15:37
One day you may be getting away with it in the near term, but ultimately it takes one bad move and you’re wiped out.

15:46
So the types of stocks that you trade is important.

15:50
I don’t trade stocks. So the types of stocks that you trade is important.

15:54
And I’ll add to what I’ve already said — and include the fact that I don’t trade stocks really that are under $10 a share.

15:59
I might do some with dividends or whatever, like there’s there’s some that that can float below that level.

16:04
But in terms of swing trading, I don’t go below $10. And another aspect that’s related to trading but not actually related to the trade itself is the education.

16:13
And the education is important because it makes you aware of the risk that’s around you through education.

16:19
How would you know that VIX-related products are very toxic without education?

16:24
How would you know that selling naked calls is a horrible idea? Without education, how would you know that buying out-of-the-money calls is a horrible idea?

16:33
So the education is going to make you aware of the risk around you.

16:37
So we have four things here. The position sizing, the stop losses, the types of stocks that we trade, and then the education that we invest in ourselves to make us more aware of the risk around us.

16:47
These four elements will help Lincoln Hawk here better manage the risk when it comes to growth stocks.

16:53
Without it, yes, it is a high-risk thing to go into. I’ve told you guys before, but I enjoy going on cruise ships.

17:00
We have a port that’s, you know, just a couple minutes down the road and we’ll hit that for a weekend sometimes after I’m done trading on Friday.

17:07
And let me tell you, down on the bottom, one of the bottom floors, there’s always a casino. And when you get out to sea, they open it up.

17:13
People can, can bet their life savings away if they want. And it looks like some people do.

17:18
Now, I could go down there and I could play Texas Hold ’em. I’ve played it before, but am I really educated on the odds and on the probabilities and on human psychology around Texas Hold ’em? No.

17:29
Or you play that one game craps. So, you know, I I love watching it. When I go on the ship, I’ll watch these people play.

17:37
I have no idea what is going on there. I know people like to get those sevens.

17:42
I know people blow on the die. I have no idea what’s going on.

17:46
Imagine if I just start playing. I have no idea if I’m even doing something right or wrong.

17:49
The risk for me in that situation is immense. More than likely, even if I get lucky a couple times, I can guarantee you I’m going to lose every dime that I gamble.

18:00
So risk is really what you make of it, what you invest in, how you determine your trading plan and your trading strategy through the four points that I just talked about.

18:06
But one thing that I would also say that helps you manage the risk is swingtradeinthe-stockmarket.com.

18:14
Yes, this is the service that goes alongside of this podcast that helps support the podcast.

18:21
Check it out. swingtradeinthe-stockmarket.com.

18:23
That’s going to take you to my SharePlanner website and you’re going to get all of my stock market research each and every day.

18:29
That’s going to include daily watch lists, all the stocks that I’m looking at potentially trading that day.

18:35
Plus later on that same day, I’m going to provide you with a watch list review of what went right, what went wrong on the stocks that I traded.

18:42
Then I’m also going to provide throughout the week, mega cap updates on the biggest names in the stock market.

18:49
Plus I’m going to give you a stock market update as well.

18:53
That’s not just it. I also provide my bullish and bearish master watch list from which I curate my trades from at the beginning of each week.

18:58
So check that out again, swingtradeinthe-stockmarket.com. You’re supporting the podcast in the process.

19:03
So just as much as the position sizing, the stop losses, the type of stocks, the education — how important those are — also making sure, and we’ve talked about this already, but I’m I’m just trying to hammer that point home with you guys, making sure that some of the non-related experiences in life doesn’t carry over in a very negative way.

19:22
That would also encourage Lincoln. We got a lot of changes happening in society right now, some good, some not so good.

19:28
But I mean, you have, for instance, you have AI starting to really rear its head and and whether that’s going to be for better or for worse, no one really knows yet.

19:36
But one of the industries that could be impacted by it is is trucking, obviously.

19:41
So, you know, maybe on a bright spot, he’s he’s getting out before others might be forced out one day.

19:46
I don’t know that for sure. I can’t say that with with any certainty that, you know, it’s going to be autonomous truck drivers going down the road one day, but the potential for that’s there.

19:56
I think they are trying to work towards that. But we have to be willing to accept change around us.

20:01
There’s things that are going to change that that we’re not going to like.

20:04
And and we can either, you know, stew about it or we can make changes that allows us to adapt.

20:08
And so I’m hoping that this is an opportunity for Lincoln Hawk to be able to adapt to a new environment, to be able to do so successfully.

20:15
He talked about — and this is the last stuff that we’ll talk about here on this episode — but he talked about how his investment advisors really failed him.

20:22
And that if you want something done, you got to do it yourself.

20:29
And that’s 100% true. I think investment advisors are some of the worst people out there.

20:35
I don’t think most of them have a clue to what they’re doing.

20:38
In fact, I’d say 95% of them, they’re on the golf course.

20:43
When you think that they’re managing your money and they’re trying to get more clients, that’s really all they care about.

20:48
They want more clients. And if they’re working for a big outfit, they’re taking their direction from people that are much higher up the ladder than them.

20:53
They’re not doing the research really themselves. They’re being told what to push their clients into.

20:58
What they can’t trade it for them and they’re really not that great at their job.

21:04
They’re just a middleman or or a face that you can associate your money with.

21:07
But in the end, they don’t care about your money.

21:10
I’ve never really met an investment advisor that didn’t say well, we’re we’re optimistic on the long term prospects of the stock market.

21:18
We think that it’s going to rebound pretty well. It’s going to do well.

21:21
Of course, the market over the decades has always gone up, but there is some pretty volatile brutal times and not all stocks survive.

21:30
So yes, I think that — and I’ve always long advocated for this — the best financial advisor is going to be yourself.

21:36
And I think that one of the best things that we can do is become smarter than the financial advisor and educate ourselves because in the end, no one’s going to care about your money more than yourself.

21:46
If you enjoyed this podcast episode, I would encourage you to leave me a five star review on whatever platform you’re listening to — Amazon, Spotify, Apple, Google, iHeartRadio — whatever platform you’re listening to me on, just take a minute and leave me a five star review.

22:01
It really helps me get the word out, really helps me expand the audience and that really does mean a lot to me.

22:05
Plus, keep sending me your questions, ryan@shareplanner.com. I do read them all.

22:09
I’m the only person that reads them and I would say 99% of the emails I do make an episode out of.

22:16
So keep sending them my way. If you sent me one a long time ago, might have missed it or overlooked it. Send it to me again and I’ll make an episode out of it.

22:23
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22:29
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22:36
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22:44
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22:51
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23:02
You have any questions, please feel free to e-mail me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.