An insight from AMP Capital
We all have good and bad experiences that shape how we think and how we tackle particular problems. This is particularly relevant when it comes to investing. We might have a good experience buying a particular stock or asset that colours our view when assessing a similar transaction in future. These emotions are sometimes described by psychologists “as ‘anchoring’ – a mental shortcut in which recent memorable events are considered more likely to recur than probabilities suggest,” says Nader Naeimi, AMP Capital’s head of Dynamic Markets.
Anchoring is one of the behaviours that investors display that can reduce their returns. You can read more about anchoring and how to avoid its pitfalls at AMP Capital’s SMSF web resource.