Swag refers to valuable goods, often obtained illegally. Just because your friend has a bag of swag does not make him a pirate (although the patch and wooden leg might say otherwise).
Generally meaning “loot, booty, or plunder,” swag is the stuff in the bags of excited party-goers and plunderers alike. It can also be a bundle carried by a swagman, an Australian migrant worker or drifter. From the Old Norse (re: Viking) sveggja, meaning “to swing or sway,” the verb swag can mean “to sway unsteadily or stagger.” Your bag of swag may swag from its own weight, and you too may swag just trying to carry it.