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Swag stands for "secretly we are gay". People use it when they are secretly gay but when another person hears it, they just think it's like a synonym for "cool" while secretly, it's actually a word we use (us gay people) when we find another person really cool and like we really like them so yeah y'know?? the sentence "I'm so swag" is usually accompanied by the 😎 emoji, because us gay people, are the coolest. So when you hear somebody complimenting you by telling you YOU are swag, they are most definitely, a gay person.
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