By Kevin Bailey
Happy Monday, June 1, Stackers, and welcome to the unofficial start of summer! Let’s dive right in… Today, Neighbor Doug is excited to announce our guest, Gay Hendricks, author of the book Conscious Luck. Plus, you’ll want to be sure to tune into our chat with Justin Pogue to discuss the current situation and how it affects both renters and landlords alike, and what solutions are available to help bridge current struggles. Later, we’ll answer the question: does the law of supply and demand mean that stock prices are currently artificially inflated? Caller Jay left a voicemail on the Haven Life Line and notes that the number of publicly traded companies have halved since 1996. Wouldn’t supply and demand dictate that these companies stock prices go up (more demand, fewer shares), regardless of their performance?
The Coronavirus dried up many of the typical jobs that high school and college students seek to earn money during summer break. Teen workers seeking employment are striking out so much that the April unemployment rate for teens aged 16-19 hit 32%, marking a high not seen since 1948, according to the Bureau of Labor Statistics. As more teens hit the job market in June and July, as schools let out for the summer, the rate typically climbs higher. Teen unemployment had been steadily declining following the 2008-09 recession, and summer jobs had been rising in popularity – reflecting a healthy labor market. The pandemic swiftly reversed that trend, as more than 2 million retail jobs disappeared in April as thousands of stores closed.
Without a chance to earn money over the summer, young workers are missing out on thousands of dollars of extra income. Because it’s a difficult market for traditional teen employment, Joe posits that maybe it is a good opportunity for parents to work with their teens on competitive job hunting skills.
Anecdotally, OG did notice “help wanted” signs on various fast food places while driving around, so there may still be opportunities there for those who are motivated, but opportunities will mostly likely be dependent on the region.
Joe wondered out loud about what online opportunities may be available that both laid off workers and young people could do – be it sorting products or reviewing documents on some Google Drive. With age comes wisdom, and Joe has plenty of wisdom. He said that if he could go back and do it all over again, he would opt for the opportunity that offered the best chance to learn real marketable skills, and not just go for the easy payday.
“A monthlong [sic] battle with the coronavirus made it difficult for Esteban Giron and his husband to pay their $990 rent. “I was so sick I could barely walk to the bathroom,” Giron, 41, said.
He’s lived in his apartment in Crown Heights, Brooklyn, for over seven years, and if he had to move out, it would be devastating, he said.
“I’ve never felt so at home,” Giron said.
The coronavirus pandemic has made almost every facet of American life harder, and coming up with rent is high on that list. More than 20 million jobs in America disappeared in April, and nearly 15% of people in the U.S. are now jobless.”
Justin Pogue, The Rental Expert, joined us on the shortwave to discuss emergency options, if you find yourself in such a difficult position.
1. Apply for unemployment, check in with the previous employer for severance package options, make sure you stay on top of getting the $1200 Coronavirus relief money from the US government.
2. Bring something to the table. If you’re lucky enough to still have employment, albeit reduced hours/pay, Justin recommends going to the landlord and offer them something. Even if you are able to pay the full rent, ask him/her if they’d be willing to accept a reduced amount, given the extraordinary circumstances. This will allow you to shore up your cash position and get ahead of potential future difficulties. This will allow you to avoid late fees and stay current.
3. Ask if you qualify for rent deferment. Although no ideal, ask your landlord if you can defer rents due until a later date. Please note that you will still be on the hook for the full payments missed at the agreed upon date. This option is best for those who may not have the funds to make an offer of even a partial payment.
4. Move out, end the rental contract. As a last resort, explain to your landlord that you’re having serious financial difficulties. If none of the above solutions help, offer to move out and end the contract. Justin says that one strategy there is to use your deposit. In order to facilitate a clean break of contract, offer your security deposit as your last month of rent. A shrewd landlord may accept this rather than spending money on an eviction and collections, plus he/she keeps the deposit.
According to Pogue, we may even see unemployment levels up to 40%, given the current environment – but nobody knows at this point.
State of the rental market
In April, 24% of rents went unpaid, but property management pros know that 15% of rents are generally unpaid in the first week that it’s due. So a more accurate figure is 9% more of rents went unpaid, possibly due to Coronavirus fallout. In May, the 24% from April bumped up to 31%, which is more concerning – which equates to a 16% uptick in rents unpaid.
The $1200 stimulus check helped tide many people over recently, but it remains to be seen what the long-term consequences will be. Joe remarked that the $1200 one-time payment, “feels like a bandaid,” in the big picture.
When it comes to helping landlords cope, knowing that the tenants in their rental property(ies) may have fallen on hard times, Justin said that landlords who still have a mortgage on the property(ies) in trouble should talk to the mortgage provider. Deferment may be a reasonable option, but Pogue encourages landlords to get out in front of it with the lender. Working with your tenants is the best option – both legally and financially – because the only thing worse than a building with non-paying tenants is a building with no tenants.
Joe also pointed out that in times like these, your credit score becomes more important. Rental payment history is also being introduced as part of the credit score calculation. Justin said that he thinks this makes sense, because it shows the track record of reliable payment history. Going forward after this pandemic situation, it could be even more valuable to show a solid history.
For more detailed information that can help you, check out Pogue’s book, Rental Secrets, or the website, rentalsecrets.net. You will learn how to think like the other side when negotiating terms as a tenant or landlord, and allow you to make the best decisions to achieve your and the other party’s goals. (“Think Win-Win”)
Can you “Build your Luck”?
Psychologist and author Gay Hendricks called in to Joe’s dad’s shortwave to discuss the role luck plays in careers and life in general. After studying his PhD from Stanford University, Hendricks spent 20 years at the University of Colorado in the counselling/psychology department and founded his own company, the Hendricks Institute. He has been executive producer and producer of a couple movies and has been a detective writer.
Hendricks believes he has been the “luckiest man on earth” for the past 40 years. When he was 14, he discovered the belief that he could change his luck simply by changing what’s in his mind and/or heart. He was at a theater and there was a drawing. The kid next to him, Danny, predicted he would win the drawing. After Danny won the grand prize, young Gay asked him how he did that, to which Danny told him that there were lucky and unlucky ones in his extended family. Danny said that he made the conscious decision that he would be the one of the lucky ones. Stanford University professor in the Department of Management Science and Engineering Dr. Tina Seelig said, “Luck is like a wind blowing, and our job is to get our sails open to it.”
This really got Joe’s attention, because Dr. Seelig is in the engineering science field, an area traditionally known for processes and scientific expression. “The key is understanding that luck is rarely a lightning strike, isolated and dramatic, but a wind that blows constantly; you need to build a sail made up of tiny behaviors to catch the winds of luck,” Seelig says.
“The key is understanding that luck is rarely a lightning strike, isolated and dramatic, but a wind that blows constantly; you need to build a sail made up of tiny behaviors to catch the winds of luck,”
- Dr. Tina Seelig, PhD
Catching the sail of the winds of luck
Hendricks says that, “If you’re not open to being supported by luck, if you’re kind of closed to that, like you firmly believe that you have to work for everything you get, I mean that’s a good thing in a way…but you also need to be open to being supported from outside by unusual events.” Dr. Hendricks argues that by simply being open to the possibility of outside events influencing your current state, you can increase the odds of good (or bad) things happening in your life. He shares a story of an event from back in 1995:
He was on his way back from the airport after a trip, and happened to stop by the office for five minutes to pick up some papers rather than going directly home. His wife also happened to be in the office at the time for five minutes, rather than being home where he expected her to be. As chance would have it, a stockbroker had stopped by for five minutes to tell his wife about a dot-com start-up that was just happening, for which he was doing a private placement. The 27 year-old broker seemed totally out of his element, having a mouth full of braces, wearing a hawaiian shirt and donning flip flops. This start-up he was selling was called software.com, which had a process to improve email (remember, this is back in the mid-1990s). He and his wife were given the opportunity to buy in immediately after the angel-round, in the “friends and family round.”
Gay was skeptical, but his wife, Katie, was enthusiastic. The broker also worked for her parents, so there was a level of trust there. Gay asked about specifics, and it turns out that $30,000 bought 10,000 shares of this start-up ($3.00/share). At this point, Gay was tired and his daily decision quota was at its limit, so he delegated the decision to Katie. It was not chump change, but he trusted Kate to make the call. Smart move. Over the next few years, they watched the stock go from $3.00/share up to $150.00/share. This made him a true believer in the power of luck – being in the right place at the right time for the ideal result to occur.
Had he gone straight home, Katie would have told him about it later, and he probably would not have been so receptive to the idea of investing 5% of their net worth in an unknown company. The totally radical part to it is that the money that was invested already had a goal assigned to it – to put it toward a foundation.
Principles of luck
Gay goes on to emphasize that one of the “principles of luck” he has is to develop “luck-worthy goals.” He has found that money chases good goals. His career has taken him from a traditional education environment to establishing his own “alternative graduate school” that had no grades and required nothing extraneous, which is how the Hendricks Institute was born. They graduate 50-100 students annually that go on to take what they’ve learned and apply it to their chosen field – from psychology to medicine to law.
To the naysayers, Hendricks can relate. At first, he was highly skeptical of this line of thought. Over time, through learning and experiences, Gay began to open up to the possibility that luck is a real and powerful force that can impact our lives. It begins with willingness and commitment, he says. “You have to be willing to stop smoking. If you’re unwilling to do it, you can’t get started at all.” He says to ask yourself, “Am I willing to be luckier tomorrow than I am today? Am I willing to be luckier every day than I was the day before?” He believes that half the battle is being open to the concept. All it takes, he says, is taking ten seconds to make a commitment to yourself: “I commit to being luckier every day of my life.”
“I commit to being luckier every day of my life.”
-Dr. Gay Hendricks, on making a commitment to yourself
He says that once you make a commitment to something, your life becomes about the fulfillment of that commitment. Joe agrees that commitment is a process. You’re not going to be perfect immediately upon starting a new endeavor, but if you make the commitment to something and follow through, you’ll improve and your life will conform to this commitment.
Gay says that, in order to make space for attaining the commitment of being lucky, you’ll need to overcome the “upper limit problem,” which is to set lower expectations based on the limiting beliefs that outrageous goals are unattainable. The main personal barriers lie within our own limiting beliefs.
If you’re so stuck in a series of unlucky events that you believe that you’re destined to be unlucky your whole life, Gay says that changing that is within your power, it all starts with changing one thought consciously in tour mind. The act of changing that one thought will have a domino effect that spills over into other limiting thoughts, and, consequently, real life events.
“Human beings can change the circumstances of their life by changing things in their mind”
–William James, Father of American Psychology (1842-1910)
Hendricks believes that your current situation comes from events of your past, but you are in control to build a better future. Building the “lucky trait” in your mind will create a cascade in the universe of positive (“lucky”) events in your life. More than anything, Hendricks says, we need to get a sense of our own chosen purpose in our life. What is it that, above all, you want your life to be about? What is it that you most want to do?
Oftentimes, if we really look inward, we find that our days are filled with tasks that do not serve our sense of purpose. Being conscious about your tasks, your life, and your habits is a first step toward achieving your higher purpose.
Takeaways from our conversation with Dr. Gay Hendricks
1. Being conscious and intentional with your daily decisions and actions is important toward achieving your life’s purpose
2. Be open to the concept of luck in your life. Commit to being lucky, and see what happens.
3. The power to change your luck is within you. It starts with changing your thoughts to attract luck into your life.
Jay called in from Atlanta, noting that there are roughly half the number of publicly traded companies today as there were in 1996 and more money being invested in the stock market today than in 1996. Based on the property of supply and demand, Jay asked if the simple supply and demand dynamics alone will drive stock prices higher?
OG said that the upward trend in stock prices cannot necessarily be attributed to supply and demand. He cited a study done by TD Ameritrade that revealed an increase of trades done daily which happened after they dropped their trading commissions to $0. While he cannot completely refute the concept of supply and demand being responsible for stocks increasing in value, he does believe that there are a myriad of factors that should be considered.
Joe added that Dr. Michael Burry’s assertion that the indexing trend has resulted in the unintended consequence of a few large financial companies controlling the board votes for publicly traded companies. The indexing megatrend has led to potential inefficiencies in pricing for stocks, driving up prices “irrationally.” OG pointed out that active management still controls more money than index funds, but noted that the rate of new money going to index funds supersedes that going to active managers. Ultimately, it is impossible to predict in advance what active fund manager is going to outperform the market.
Supply and demand could affect market prices, but it is only one of many factors that impact market prices.