§ 01
| Anchor | Why It’s Dangerous | Better Approach |
|---|---|---|
| Your purchase price | Irrelevant to future returns — the stock doesn’t know what you paid | Evaluate based on current valuation vs. intrinsic value |
| 52-week high | Past prices don’t determine future value | Compare current price to fundamental worth |
| Analyst price target | Often anchored to current price themselves | Build your own model with independent assumptions |
| IPO price | An arbitrary starting point set by bankers | Value based on current financials and growth |
§ 02
Studies show that even random numbers influence financial decisions. In one experiment, spinning a roulette wheel before asking people to estimate a country’s GDP systematically biased their answers toward the random number.
§ 03
Think of a stock you own. Is your decision to hold it influenced by what you paid? Would you buy it today at the current price if you didn’t already own it? If not, you’re anchored.
§ 04
You bought a stock at $80. It’s now $60. You wouldn’t buy it at $60 today, but you’re holding ‘until it gets back to $80.’ What bias is this?
§ 05
Five questions · AI feedback
Sit with the ideas.
An analyst sets a $150 target on a stock at $120; another independently values it at $95. You read the $150 target first. How does anchoring most likely distort your subsequent valuation work?
Why:
Try this in paper trading
Dollar-cost average for four weeks
Pick one ETF or stock you'd hold for 10+ years. Paper-buy the same dollar amount of it once a week for four weeks — same day each week. Journal what you noticed about the rhythm of the discipline.
Open paper portfolio →Practice mode — simulated trades, not investment advice.