Episode #1048: In this episode of the Arete Coach Podcast, Kenny Rogers’ lyrics from “The Gambler” are applied to decision-making in business and life—“You gotta know when to hold ‘em, know when to fold ‘em, know when to walk away, know when to run…” Continue reading for insight on how to spot sea changes, read data, and recognize patterns—or as Kenny Rogers would say, knowing “when to hold ‘em and when to fold ‘em.’”—for successful decision making.
About Severin Sorensen
Severin Sorensen is a serial entrepreneur and lifetime learner with a passionate curiosity for people and businesses. Severin is the CEO of ePraxis LLC, a premier level retained search firm that provides executive headhunting, talent selection, and executive coaching. In addition to finding top talent, Severin has provided over 7,500+ hours of paid executive coaching to entrepreneurs, CEOs, Presidents, and C-level executives. Severin is an ICF ACSTH Certified Executive Coach, Certified Organizational Development Coach, Certified Life Coach, and Certified Positive Intelligence® Coach. Severin is the founder/producer of a new podcast, Arete Coach, that explores the art and science of executive coaching with some of the industry's best coaches.
From 2010-2018 Severin was also a Vistage Chair where he coached three CEO and key executive groups. In 2011, Severin received the "Rookie of the Year Chair Award" from Vistage. Since 2013, Severin has added international speaking for Vistage, CEO conferences, executive peer groups, and corporations on the topic of identifying and hiring difference-making top talent.
After graduate school, Severin moved to Washington, DC, where he worked on security-related economic and public policy issues that included a brief stint in The White House, as a Special Assistant to the President, for George H. Bush (POTUS 41). In 1994, Severin founded Sparta Consulting Corp., and Sparta provided world-class physical security and safety related management consulting services for public and private sector entities. From 1994-2002, Severin managed HUD's Crime Prevention Through Environmental Design technical assistance and training program. In 2005, Severin sold Sparta to Westec Interactive (Digital Witness), which was subsequently acquired by Interface Security.
Severin, a native Californian, grew up in Salt Lake City, UT and graduated with honors from the University of Utah with Economics and Political Science degrees. He completed graduate studies in economics at King's College, Cambridge University (England), where he earned a M.Phil. degree in Economics. Severin has a great love and appreciation for sports, and while overseas, Severin rowed for the King's College Boat Club, and played basketball for the Cambridge University Basketball Team (1986-87).
Turbulence in the real estate market
According to a survey by Zillow, more than 1 in 10 Americans have moved by “choice” or due to “circumstances” because of COVID-19. Despite the increase in home demand (and housing prices as a result), on November 2nd, Zillow suspended their home purchase plans after extensive buying and laid off 25% of their workforce. Severin questions if Zillow’s decision could be a sign of “a market top for housing,” and explains 5 underlying factors that could be the cause of high real estate prices. He states that the CARES Act, historically low interest rates, people moving to less populated areas with less housing supply, increased material costs, and the fear of missing out on real estate as a hedge against inflation have all contributed to increased real estate prices.
5 indicators of change in the broader market
After discussing turbulence in the current real estate market, Severin addresses 5 indicators of potential changes in the broader market. First, inflation is decreasing disposable income. Second, the Federal Reserve Bank is expected to raise rates earlier than expected. Third, more corporations are requiring employees to return to the physical workplace. Fourth, material costs of housing inputs have risen. Lastly, increasing interest rates will reduce purchasing power of potential buyers. All of these factors represent potential changes in the broader marketplace.
Changes in the oil and manufacturing industry
As a result of the changes brought by the pandemic, oil prices have fluctuated greatly since 2020. On April 20th, oil prices were in the negatives. By November 11th, the price for oil had returned to $81.86. Auto manufacturers were also negatively affected by the pandemic which led to layoffs and partial work schedules for employees. When the economy began to reopen, electronic chip shortages were present which further affected the automobile industry. There have also been challenges in the shipping and supply chain industries which have greatly affected the marketplace.
Experiencing the current real estate market
Severin recently sold his “baby boomer-style family home” and shares how the demands of the millennial real estate marketplace and changes brought by the pandemic affected this process. During this experience, Severin noticed that the “shortage of housing supply was starting to abate” and shares that “you can often sell your property or business for a good price when there is plenty left in the property or business and when other buyers are plentiful. Or you risk selling your asset for less…”
Severin’s experience selling a former business
To “know when to hold ‘em” and “know when to fold ‘em,” it is vital that you know the market and examine currently available data. This includes watching out “for what people say and are not saying” in regard to the market, stock trends, and consumer demands. Severin uses an example from a former business that he built and sold to explain the importance of knowing your market.
After building his business in a “disruptive space,” Severin received 5 offers to purchase his company outright. After a few weeks, he decided to sell. Severin shares that he realized he could either sell his company or his buyers would buy a competitor’s business. If this happened, his competitors would have access to “more capital” and would “crush” his “company like a bug.” Severin sold his business while his other competitors were “wiped out” or forced to file for “bankruptcy.” This experience is much like Kenny Rogers’ line “know when to hold ‘em” and “know when to fold ‘em.” Severin examined the potential outcomes of his business, the facts and data about the current market, and his options available before making his decision. Doing this confirmed that it was time, in the words of Kenny Rogers, to “fold ‘em” and reap the rewards of selling his business.
Spotting future trends
Spotting future trends is critical to knowing when to “hold ‘em” and when to “fold ‘em.” Because of this, Severin shares some tips on spotting future trends. First, being observant by reading, listening, and learning about the surrounding marketplace can help individuals spot future trends. Furthermore, finding “data points that most impact your business,” being open “to the suggestion from others,” remembering that “no business is too strong to overcome major market trends,” and remembering that “the time to sell an asset is when there is still value left in it” can help business leaders predict and respond to future trends.
Applying Kenny Rogers’ line
Severin reviews lyrics from Kenny Rogers’ famous song “The Gambler.” Rogers sings, “son, I’ve made a life out of reading people’s faces…” and Severin applies this to reading situations, competitors, and the marketplace. Secondly, Rogers sings, “if you’re going to play the game boy, you got to learn to play it right.” Severin states that, “knowing the rules, understanding the laws, understanding the regulation, understanding how others have played, learning about other people’s failures, chronicling your own, learning how to learn is an important part of learning to play the game.”
Kenny Rogers’ song also states, “you got to know when to hold ‘em and know when to fold ‘em” as well as “every hand is a winner and a loser.” In applying this to life and business, Severin explains that “there are some times when you just have to put pride aside and step back from the table and accept that this may not be the game or hand you want to play… there are other times when you definitely need to get out of there because the risks are too great.”
Several other lyrics from Kenny Rogers’ song “The Gambler” are also applied to life and business. Severin shares that for himself, “it’s been quite helpful to have the courage to make moves when it’s clearly not certain what the outcome would be, but where I can basically pull aside winning for a season or for a time or hand and that will allow me to play a game another day.”
Download the transcript
Click here to listen to the podcast, or click below to view the podcast outline and transcript:
Bernstein, J., Zhang, J., Cummings, R., & Maury, M. (2021, September 1). Alleviating Supply Constraints in the Housing Market. The White House. https://www.whitehouse.gov/cea/written-materials/2021/09/01/alleviating-supply-constraints-in-the-housing-market/
Black swan theory. (2021, November 6). Wikipedia. https://en.wikipedia.org/wiki/Black_swan_theory
Business Insider. (2021a). Baby Boomers - Insider. https://www.businessinsider.com/category/baby-boomers?international=true&r=US&IR=T
Business Insider. (2021b). Millennials - Insider. https://www.businessinsider.com/category/millennials?international=true&r=US&IR=T
Casey, A., Lee, A., & Manhertz, T. (2021, February 4). 2020 Urban/Suburban Report: How Housing in Cities and Suburbs Both Thrived in an Extraordinary Year. Zillow Research. https://www.zillow.com/research/2020-urban-suburban-report-28802/
Cohn, D. (2020, July 6). About a fifth of U.S. adults moved due to COVID-19 or know someone who did. Pew Research Center. https://www.pewresearch.org/fact-tank/2020/07/06/about-a-fifth-of-u-s-adults-moved-due-to-covid-19-or-know-someone-who-did/
Federal Reserve Board and Federal Open Market Committee release economic projections from the December 14–15 FOMC meeting. (2021, December). Board of Governors of the Federal Reserve System. https://www.federalreserve.gov/newsevents/pressreleases/monetary20211215b.htm
FRED Economic Data. (2021, November 30). Fred Economic Data. https://fred.stlouisfed.org/series/CSUSHPISA
Fry, R., Passel, J. S., & Cohn, D. (2020, September 4). A majority of young adults in the U.S. live with their parents for the first time since the Great Depression. Pew Research Center. https://www.pewresearch.org/fact-tank/2020/09/04/a-majority-of-young-adults-in-the-u-s-live-with-their-parents-for-the-first-time-since-the-great-depression/
Hoffower, H. (2019, March 18). 7 ways rich millennials spend and display their money differently than rich baby boomers. Business Insider. https://www.businessinsider.nl/rich-millennials-vs-baby-boomers-different-money-habits-wealth-2019-3?international=true&r=US
Lakritz, T. (2019, January 29). How marriage has changed from baby boomers to millennials. Business Insider. https://www.businessinsider.com/marriage-differences-baby-boomers-millennials-2019-1?international=true&r=US&IR=T
Lebowitz, S., & Akhtar, A. (2019, November 21). 11 things millennials do completely differently from their parents. Business Insider. https://www.businessinsider.nl/millennials-habits-different-from-baby-boomers-2018-3?international=true&r=US
North American Van Lines. (2020). 2020 U.S. Moving Migration Patterns Report | North American Van Lines. https://www.northamerican.com/migration-map
Rothchild, J. (1996, April 15). When The Shoeshine Boys Talk Stocks it was a Great Sell Signal in 1929. So What are the Shoeshine Boys Talking About Now. Fortune. https://archive.fortune.com/magazines/fortune/fortune_archive/1996/04/15/211503/index.htm
Rubtsova, V. (2019, April 22). Baby Boomers and the Future of Homeownership in the United States. Berkeley Economic Review. https://econreview.berkeley.edu/baby-boomers-and-the-future-of-homeownership-in-the-united-states/
Soper, T. (2020, May 18). Zillow restarts home-buying business, showing confidence in real estate amid ongoing pandemic. GeekWire. https://www.geekwire.com/2020/zillow-restarts-home-buying-business-showing-confidence-real-estate-amid-ongoing-pandemic/
Stokel-Walker, C. (2021, November 11). Why Zillow Couldn’t Make Algorithmic House Pricing Work. Wired. https://www.wired.com/story/zillow-ibuyer-real-estate/
Taylor, C. (2019, March 21). A Growing Problem in Real Estate: Too Many Too Big Houses. WSJ. https://www.wsj.com/articles/a-growing-problem-in-real-estate-too-many-too-big-houses-11553181782
The TIME Vault: November 4, 1929. (1929, November 4). TIME. https://time.com/vault/issue/1929-11-04/page/47/
Tucker, J. (2021, January 19). Austin Expected to be Nation’s Hottest Housing Market in 2021, Leading a Sunbelt Surge. Zillow Research. https://www.zillow.com/research/zillow-hottest-markets-2021-28667/
Warren, K. (2019, December 12). Millennials don’t want to buy baby boomers’ sprawling, multi-bedroom homes, and it’s creating a major problem in the real-estate market. Business Insider. https://www.businessinsider.nl/millennials-vs-baby-boomers-big-houses-real-estate-market-problems-2019-3?international=true&r=US
Zillow. (2021, April 6). Zillow’s 2021 Mover Report: The Opportunity, Emotion and Trends Behind the Great Reshuffling. Zillow MediaRoom. http://zillow.mediaroom.com/2021-04-06-Zillows-2021-Mover-Report-The-Opportunity-Emotion-and-Trends-Behind-the-Great-Reshuffling
Zillow Group Reports Third-Quarter 2021 Financial Results & Shares Plan to Wind Down Zillow Offers Operations. (2021, November 2). Zillow Group.
Copyright © 2021 by Arete Coach LLC. All rights reserved.