A word that was once originally cool, a shortened form of swagger, or a meter of one's "coolness." This was, of course until it was blatantly overused by 14-year old girls thinking they are cool by overusing the word "swag." It is best used only once a week, or else people think you are a fag from saying "swag" too much.
Random girl: Hey Jessica those are some pretty cool shoes!
Jessica: Oh yeah. Swag.
Random girl: That doesn't even make sense...