The halo effect

Very few people talk to this in investing.

There are plenty of studies everywhere and this goes unnoticed for most of us.

The order matters.

First impressions matter even more.

It was discovered that when professors check exams to grade them, they were incredibly influenced by the first questions/essay of the student.

If it was good, that immediately altered the vision that the professors had on the rest of the exam questions.

They graded the rest questions very favourable even if the answers were mediocre.

This effect was so pronounced that, in some universities, professors changed the way of correcting exams. They now review only the first question of all students before going to questions 2, 3 and so on, passing through each student’s exam as many times as questions the exam has.

That happens in real estate too.

If location is good… you start looking favourable.

If the entrance, the hall is good, the rest of the house can be pure sh*t with mini bedrooms with terrible layouts… you’ll be looking at them favourable.

The smell, the music, the lighting when you enter a house is critical.

Take note of that.  

 When you’re visiting several houses in a day, if you see a great potential in the first one, you’ll believe that the rest are also quite good.

If you feel, at any moment, that you may be suffering hallo effect… breath, and go back tomorrow. Different time, different order.

As I said, order matters.

Many people jump into their first investment property.

They are inexperienced. Too proud to look for advice or help.

Their experience doesn’t end well.

They stop investing.

And with that, dreams and freedom.

It’s funny that, when we work for a company, and we don’t know how to do something, we hire someone that help us… but we don’t do it in our personal lives.

Companies thrive, and some people, even the workers of those companies, not much.

More about the halo effect and how to make it work for you, here.