Because what you believe something is worth may be more about your memory than the market.

A seasoned investor once told me, “I bought that stock at ₹1,200, so I’m waiting for it to hit ₹1,200 again before I sell.”

The stock was now at ₹920. The company’s fundamentals had changed. Its industry landscape had shifted. But he didn’t care about any of that.

He was fixated on one number: ₹1,200.

That was his anchor—and it was making him blind to reality.

This is the power—and danger—of anchoring bias in investing.

What Is Anchoring Bias?

Anchoring bias is when you fixate on a specific number (often the first one you see or the price you paid) and use it as the baseline for all future decisions.

In investing, anchors can be:

• The price at which you bought a stock or mutual fund

• A “high” the asset once hit

• The market level when you started investing

• A friend’s return on the same fund

Even when the world moves on, your decisions remain tied to that mental price tag.

How Anchoring Shows Up in Real Life

• You hold a loss-making stock waiting to “break even,” ignoring better alternatives

• You avoid buying into the market at new highs because “it was cheaper 6 months ago”

• You overpay for an IPO because you heard it was expected to list higher

• You compare your fund’s performance to a friend’s portfolio without context

Anchoring makes you cling to the past while ignoring the present.

And in finance, that can quietly erode your returns.

Why Anchoring Is So Hard to Let Go

Anchoring offers false comfort.

It makes you feel like you're in control, that you’re waiting for logic to prevail.

But here’s the truth:

• Markets don’t care what price you entered at

• Companies evolve, economies shift, and narratives change

• The goal isn’t to be right again—it’s to be relevant now

The longer you stay anchored, the more likely you are to miss opportunities and lock in regret.

The Psychological Trap: Loss Aversion Meets Anchoring

Anchoring bias is often fuelled by loss aversion—the idea that we feel the pain of losses twice as intensely as the joy of gains.

So when your ₹1,200 stock drops to ₹900:

• You don't want to feel like you “lost” ₹300

• You hope it recovers so you can exit with your pride intact

• You delay decision-making, and sometimes, even double down

This is emotion-led investing disguised as strategy.

How to Outsmart Anchoring Bias

1. Ask: “Would I buy this today at this price?”

This forces a clean-slate decision. Forget your entry point. Look at fundamentals, outlook, and alternatives.

2. Focus on Portfolio Goals, Not Stock Prices

What role does this investment play in your overall plan? Is it still aligned? Or are you holding it because you feel stuck?

3. Use Data Over Emotion

If a mutual fund underperforms for 3+ years and no longer fits your goals, exit—even if you’re “down.” Look forward, not back.

4. Set Predefined Review Points

Decide ahead of time when you'll review or rebalance (e.g., quarterly, annually)—not when your emotions get triggered.

5. Work With a Third Party (Advisor or Platform)

Sometimes, the best way to see your own bias is to hear someone else say it aloud. Fresh eyes break stale anchors.

What Anchoring Has Cost Investors

Over the years, I’ve seen investors:

• Hold poor performers for years just to avoid selling at a “loss”

• Miss entire bull runs because “Nifty at 15,000 felt too high”

• Skip SIPs in great funds because “NAV was higher than before”

• Wait for stocks to bounce back to mythical highs—even when the business was broken

In every case, the anchor was emotional. The market? It had moved on.

TL;DR — Too Long; Didn’t Read

• Anchoring bias is when you fixate on a past price and make decisions around it

• It clouds logic, locks up your capital, and delays better choices

• Markets evolve—your portfolio should, too

• Ask, “Would I buy this today?” to reset your perspective

• Use structured reviews, fresh data, and outside perspective to break the anchor

Don’t let yesterday’s number decide tomorrow’s future.

Because the strongest investor isn’t the one with the best memory—it’s the one with the clearest view of the present.