In the video, Private Wealth Advisor, Paul Blatz explains that anchoring is the tendency for investors to rely on a limited set of data points when making investment decisions. He gives an example of individuals anchoring their decision on a company’s previous high stock prices, assuming it will regain its value. Paul emphasizes the need for comprehensive research and analysis to account for all relevant factors and make informed decisions. He also highlights how anchoring can cause investors to miss out on opportunities by avoiding stocks at all-time highs. By being aware of anchoring and its impact, investors can make more rational and unbiased investment choices.
Watch our Behavioral Finance Explained Series here.
