Anchoring Bias: How Initial Numbers Trick Your Investment Decisions

When you see a stock at $50 and it drops to $35, you think it’s a bargain—until you realize it used to be $80. That first number, the anchoring bias, a cognitive shortcut where your brain overrelies on the first piece of information it receives. Also known as anchor effect, it’s not just a quirk—it’s one of the most dangerous traps in investing. Your brain doesn’t calculate value. It compares. And it locks onto whatever number pops up first—whether it’s a stock’s 52-week high, a broker’s ‘original price,’ or even the price you paid. isrameds.com

This isn’t just about stocks. It shows up everywhere. If you see a $2,000 laptop on sale for $1,200, you feel like you’re saving $800—even if the same model costs $900 elsewhere. In investing, that same trick makes you hold onto a stock because you bought it at $75, even when every signal says to sell. It’s not logic. It’s emotion dressed up as logic. And it’s why so many investors sit on losers, waiting for the price to ‘get back to where it was.’ The sunk cost fallacy, the idea that you must keep investing because you’ve already spent time or money feeds off anchoring. They’re twins. You see the original price, you feel the loss, and you refuse to admit you were wrong. Meanwhile, the market moves on.

It’s not just retail investors. Even professionals get caught. A fund manager who bought shares at $40 will ignore earnings reports if the stock is at $38, hoping it’ll climb back. A robo-advisor might suggest tax-loss harvesting at a certain threshold, but if you’re anchored to your purchase price, you’ll ignore it. And in crypto, where prices swing wildly, anchoring to an all-time high is a recipe for long-term losses. The fix? Stop looking at your original cost. Start looking at the asset’s current value, its fundamentals, and your portfolio goals. Ask: If I didn’t own this, would I buy it today at this price? If the answer is no, you’re not holding an investment—you’re holding a memory.

What you’ll find below are real, practical posts that show how anchoring bias shows up in everyday investing—from broker pricing tricks to how robo-advisors handle tax-loss harvesting thresholds. You’ll see how emergency fund rules get twisted by anchoring to ‘3 months’ as a magic number. You’ll learn why bond ladders feel safer not because they’re better, but because they anchor you to predictable payouts. And you’ll get tools to break free from the first number that stuck in your head—and start making decisions based on what’s real, not what you remember.