The anchoring effect: why your purchase price keeps shaping your decisions

The price you once paid for a security carries no information about what will happen to it next: it is a fact of your biography, not a property of the company. The anchoring effect is a persistent tendency to judge a new value not on its own merits but as a deviation from the first number that came into view. The anchor may be an entry price, an all-time high, a round level or somebody else's target price. The decision "I'll sell when it gets back to my price" is not a decision about the business but about a figure in your own trade — and that is exactly why it so often turns out worse than a decision taken afresh.

What an anchor technically does

An anchor works not as a belief but as a reference point. When an estimate has to be made quickly, the mind takes the nearest available value and adjusts it — but the adjustment almost always stops too early, short of the value that the data themselves would imply. That is why an anchor does not argue with the facts: it shifts the scale on which the facts are measured. You can read the financial statements honestly and still arrive at a conclusion skewed towards the first number you saw.

It matters that an anchor does not need to be plausible. It works even with an arbitrary value: a price named at random still pulls the subsequent estimate in its direction. So "simply knowing" about the bias is not enough — awareness does not cancel the shift, it only lets you build a procedure in which the anchor plays no part.

Why the purchase price is the most harmful anchor of all

The entry price has a special property: it is emotionally charged and at the same time entirely devoid of information about the future. The market does not know the price at which you got in and is under no obligation to return to it. Yet the anchor turns it into a threshold: below it, "I'm not selling, so as not to lock in a loss"; above it, "I've already made money, I can get out". This is how the [disposition effect](disposition effect /ru/journal/slovar/effekt-dispozicii) is born — the tendency to sell winners too early and hold losers too long. A related bias is the [endowment effect](endowment effect /ru/journal/slovar/effekt-vladeniya): a security already sitting in the portfolio seems more valuable than the same asset bought anew.

The test question is simple: if you did not hold this position right now, would you buy it at the current price? If the answer is "no", then holding it because of your entry price means buying it all over again, only silently.

Where anchors lie in wait for you on the platform

An anchor rarely comes from within — more often it is handed to you. An all-time high printed next to the quote. The par value of a bond. A round level that the conversation keeps gravitating towards. A target price from a research note, with its own horizon and its own assumptions, usually not yours. A multiple described as "normal" for the industry, even though the particular company has a different debt structure.

With multiples, anchoring is especially visible: once you are used to the value of 3,77 for a familiar stock, it is easy to start measuring other sectors by it. Why that should not be done is covered separately — P/E: what it is and why low does not mean cheap. A similar trap is comparison with a prior period, where it is not psychology that lets you down but the arithmetic of the base: the base effect.

How the defence is built: procedure instead of willpower

What works against an anchor is not discipline but a sequence of actions in which the anchor physically has no time to form.

Valuation before price. State what you believe about the business, and only then look at the quote. The reverse order all but guarantees that the valuation will be fitted to the price.

Write your exit conditions in terms of the business, not the entry price. "I'll sell if revenue stops growing" can be tested. "I'll sell when it climbs back to my price" cannot.

Reason from the whole portfolio. The question "what weight of this security do I need now" does not contain the purchase price, whereas the question "should I get out of a loss" contains it in full. For this it helps to look at the list of stocks as a set of opportunities rather than as a history of your own trades.

Separate decisions in time. A decision taken at the moment of a sharp move is almost always anchored to the latest number. How intraday spikes come about is explained in the piece on the trading day and sessions.

Value each instrument on its own terms. With a bond, "your price" is replaced by par value, although the real reference point is sensitivity to interest rates; there is more on this in the article on duration, and the issues themselves are in the OFZ section.

When the purchase price does matter after all

In strictly one place: when calculating tax. There the acquisition price is not a psychological reference point but an element in calculating the tax base: 13%. The same applies to dividend decisions, where what matters is not your entry price but the dates and amounts of future payouts — these are easier to follow in the dividend calendar: {{dividend_calendar|limit=5}}.

An honest caveat: the platform has no measurements of its own showing how strongly anchoring affects the decisions of its particular readers, and presenting other people's laboratory estimates as a fact about the Russian market would be a sleight of hand. The claim here is a different and more modest one: the entry price is not among the quantities that describe an asset's future, and any decision that rests on it rests on nothing. The instrument card {{instrument:SBER}} and the glossary of terms will help you replace the anchor with quantities that can be verified — but the replacing has to be done by hand, every time.