Anchoring is a cognitive bias where an individual relies too heavily on an initial piece of information. Investors are particularly susceptible to this cognitive bias because there are so many different data points that can act as an anchor when making decisions about a company or stock.
Q4 hedge fund letters, conference, scoops etc
For example, it is easy to become anchored on a recent high point for a stock's value with market participants pinning their estimate of intrinsic value on the original stock price rather than underlying fundamentals.
Charlie Munger believes the worst anchoring effect is always your previous conclusion. Speaking at the 2016 Berkshire Hathaway annual...
