What is anchoring?
"Anchoring is when we get fixated with critical data points, and these data points can often be unconscious," says Prasad Ramani, cofounder of Syntoniq.
"So, for example, if you have a client that says that, 'I bought this stock at $60, and right now it’s at $55. I don’t want to sell it untll it hits $60.'
"The important thing to think about is whether the stock is worth $55 today, and what it’s going to be worth a week from now, or a month from now, or a year from now. It's price in the past is irrelevant, says Ramani.
The important thing to think about is whether the stock is worth $55 today, he says.
"When people end up making buying and selling decisions based on past data or based on their purchase price, it has very little relevance to what’s happening in markets today. The price is all about the future. When you end up looking at just the past and not the future, then there’s anchoring at play.