Classic investor psychology trap:
Buy a stock at $20, watch it climb to $80. It drops to $78.
You're up 290% from entry. But all you feel is that $2 loss from the peak.
This mental accounting error kills more portfolios than bad stock picks. Your brain anchors to the high, not your cost basis. Suddenly a massive winner feels like a loser.
This is why so many people hold through entire bull markets, refuse to take profits, then ride the whole thing back down. The peak becomes the new reference point. Anything below it feels like failure.
The fix? Remember your actual entry price. Track your real returns. A 290% gain doesn't become a loss because you didn't sell at the absolute top. Nobody does.
Peak anchoring is one of the most expensive behavioral biases in investing. Recognize it, or it'll cost you.
Buy a stock at $20, watch it climb to $80. It drops to $78.
You're up 290% from entry. But all you feel is that $2 loss from the peak.
This mental accounting error kills more portfolios than bad stock picks. Your brain anchors to the high, not your cost basis. Suddenly a massive winner feels like a loser.
This is why so many people hold through entire bull markets, refuse to take profits, then ride the whole thing back down. The peak becomes the new reference point. Anything below it feels like failure.
The fix? Remember your actual entry price. Track your real returns. A 290% gain doesn't become a loss because you didn't sell at the absolute top. Nobody does.
Peak anchoring is one of the most expensive behavioral biases in investing. Recognize it, or it'll cost you.