Category Archives: Personal development

Become A Better Investor – By Mastering One Weird “Shortcut”

Noted Harvard professor Dr Robert Cialdini, described 6 fascinating principles of persuasion in his famous book ‘Influence: The Psychology of Persuasion’ which went on to sell over 2 million copies. The principle of ‘social proof’ is when we subconsciously look to see what others are doing to help us determine what we should do in a given situation.

 

Now, if I were to ask 100 random people if they are influenced by what others are doing, I estimate that the vast majority would say they are not. Perhaps even as you read this you may think you are immune to social proof but let me tell you – you are not!

 

Canned laughter or applause on is an example. Everyone hates it and thinks it’s phony. We can usually tell when it’s being used on television. Yet research has shown time and time again that canned laughter causes an audience to laugh longer and more often and to rate the joke as funnier.

 

People who make a living out of influencing others discovered how to manipulate others using social proof long ago:

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Buskers know how to manipulate others using social proof to get more money
  • Bartenders and buskers ‘salt’ their jars with a couple of notes to give the impression that tipping notes is normal behaviour.
  • Charity fundraisers on television constantly display and communicate how much money other people have donated to reinforce the message that giving money is the correct behaviour.
  • Website owners have learned that showing how many facebook ‘followers’ you have keeps readers interested and more engaged (see my followers at the top of this page).
  • Theaters plant audience members to clap at the appropriate times and the rest of the audience follows.

 

Generally we will make fewer mistakes in life by acting in accordance with social evidence than against it. It acts as a convenient shortcut for our brain, which simultaneously makes a strength into a weakness because this automatic subconscious reflex can be manipulated (as above).

 

So what do we do?

Let’s accept that it took thousands of years for this ‘wiring’ to go in – we are not going to change it easily. Use it to your benefit by putting yourself amongst bright successful people. You will automatically imitate some of their behaviour. This will make you a better investor. I practise what I preach – last year I created a group called the Tycoon Genius Partnership for this purpose. 15 successful investors from all walks of life get together every quarter and talk about what they are doing.

A couple of weeks ago we heard how 3 members of the group formed a small partnership, found a lead in London and are set to make over £600,000 from this contact. Another member took us to his farm and showed us how he manages over 130 tenants. These experiences act as positive social proof and there is no reason why you cannot use this powerful principle to improve your results.

 

For the property investor who wants more income

stoic beliefs in property investmentAround two thousand years ago, the stoics developed a method for dealing with a phenomenon known as ‘hedonic adaptation’. The problem they said, is that we humans are largely insatiable. We lust after things and soon after acquiring them, we get bored and aim for something bigger, faster or rarer. For example, as children most of us dream of one day having our own money to spend and being able to travel to wherever we want without parental interference. Having acquired these privileges later in life, we now take them for granted. Modern life, oriented towards a largely consumerist culture exacerbates this problem in all areas of our lives.

 

The negative visualisation technique that the stoics developed helps us root out this cause of anxiety and mental suffering. The technique simply replaces the desire for things you do not have for the things you do.

 

It only takes me ten minutes every morning to perform this visualisation. I think about my family, my health, my skills, my escape from the daily commute, my free time, my library of valuable knowledge, you – my blog readers, friends and investors, and my small number of close friends. This line of thinking is not automatic – I had to make it a trained habit.

 

Another related habit worth developing, is the habit of writing and calling people who mean a lot to you. A text or a facebook ‘like’ is nice, but people know it takes almost no effort at all and therefore the perceived value to the person receiving the thank you is greatly diminished.

 

I received a handwritten letter the other day from a very busy, successful investor friend. Knowing that he had taken the time out of his day to write the letter, secure an envelope, find a stamp, and then walk to the post office meant a great deal to me. Many of my business partners invite me to their important family gatherings and send me recommended books through the post which I also appreciate for the same reason.

 

By expressing your gratitude in a meaningful way, people will appreciate and like you. When people like you, then will naturally want to do business with you whether they’re an estate agent, property investor, builder or potential business partner.

 

Activity confused with accomplishment

It is easy measure busy-ness. Number of emails sent. Time spent traveling. Late night searching on the web for infomation. Books read.

And it feels good. People even justify checking email on Christmas weekend as some kind of clever way to ‘get ahead’ of everybody else (when in fact they are all doing the same thing..)

Business means adding value. The result not the effort or time you put in to get it, and as you might expect, business results are not proportional to busy-ness.

How about stopping the busy-ness for one day – turn off your phone, leave the tablet where it is, ignore unimportant emails – and ask yourself a simple question.

“where am I trying to get to, and how am I trying to get there”

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