Anchoring: why the first price you saw still haunts you
Someone once mentioned, almost in passing, the price they had paid for a plot of land two decades ago. Every valuation since had been measured against that one old figure, as if it were still standing somewhere in the room, watching. The number itself had long stopped being useful, yet it kept shaping every decision that followed.
This is anchoring, and it is one of the quieter tricks the mind plays on us. The first number we encounter, whether a purchase price, a peak value, or a figure mentioned casually by a relative, settles into memory and refuses to leave. Every later number gets measured against it, fairly or not. This happens quietly, without any deliberate decision, which is precisely what makes it so difficult to notice in ourselves.
Why the first number sticks
The mind prefers a reference point to a blank page. Given one, it clings to that point long after circumstances have changed around it. An investor who bought something at a certain level often waits for that exact level to return before acting again, even when the original reasoning behind the purchase no longer applies to the present season.
The same happens with the highest value something once reached. That peak becomes a kind of ceiling in the mind, a number the investor quietly hopes to see again, sometimes waiting years past the point where waiting made any sense at all. Meanwhile the underlying reasons for holding or selling may have shifted entirely, unnoticed beneath the weight of that one remembered figure.
The first number you saw is rarely the right measure of today.
Loosening the grip
The way out is not to fight the anchor directly, since the mind will simply reach for another one. The better approach is to ask a different question altogether: given everything known today, and nothing about a remembered number from before, what would a sensible person choose to do now. It is a simple question to state and a genuinely difficult one to live by, which is exactly why it is worth practising deliberately.
This is easier with a written plan than with memory alone, which is one reason a monthly promise works so well over the years. It replaces one large, memorable number with a steady rhythm of smaller ones, none significant enough to anchor against, all of them adding quietly toward time creation. Markets carry risk, and past performance never predicts what comes next, so the wiser habit is to keep judgement anchored to today’s plan rather than yesterday’s price.
What to remember
- The first number you see tends to outlive its own usefulness.
- Old purchase prices and past peaks are poor guides for present decisions.
- A written plan, revisited regularly, replaces memory with clearer judgement.
The old number may always be remembered fondly, the way one remembers an old address. But it need not decide where an investor lives today.
Hardik Joshi is the Founder of Shrey Wealth (ARN-255332), an AMFI-registered Mutual Fund & SIF Distributor and APMI-registered PMS Distributor (APRN-02027). Shrey Wealth is NOT a SEBI-registered Investment Adviser; views shared here are personal and for educational and awareness purposes only. Mutual fund investments are subject to market risks; read all scheme-related documents carefully. Past performance is not indicative of future results.