The tendency to rely disproportionately on the first piece of information encountered (the "anchor") when making subsequent judgments or estimates.
Deeper Explanation
In investing, the most common anchor is the price paid. An investor who bought a stock at ₹500 uses that price as the reference point for all subsequent decisions — holding through a deteriorating thesis because "I need to get back to ₹500." The correct anchor is intrinsic value: what is the business worth today? Another common anchor: analysts anchoring earnings forecasts to last quarter's numbers, resulting in underestimates when the business is accelerating and overestimates when it is decelerating. The deanchoring habit: always recompute intrinsic value independently of what you paid or what the consensus thinks.
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