[ang-ker] 
| 1. | any of various devices dropped by a chain, cable, or rope to the bottom of a body of water for preventing or restricting the motion of a vessel or other floating object, typically having broad, hooklike arms that bury themselves in the bottom to provide a firm hold. |
| 2. | any similar device for holding fast or checking motion: an anchor of stones. |
| 3. | any device for securing a suspension or cantilever bridge at either end. |
| 4. | any of various devices, as a metal tie, for binding one part of a structure to another. |
| 5. | a person or thing that can be relied on for support, stability, or security; mainstay: Hope was his only anchor. |
| 6. | Radio and Television. a person who is the main broadcaster on a program of news, sports, etc., and who usually also serves as coordinator of all participating broadcasters during the program; anchorman or anchorwoman; anchorperson. |
| 7. | Television. a program that attracts many viewers who are likely to stay tuned to the network for the programs that follow. |
| 8. | a well-known store, esp. a department store, that attracts customers to the shopping center in which it is located. |
| 9. | Slang. automotive brakes. |
| 10. | Military. a key position in defense lines. |
| 11. | Also, anchorman. Sports.
|
| 12. | to hold fast by an anchor. |
| 13. | to fix or fasten; affix firmly: The button was anchored to the cloth with heavy thread. |
| 14. | to act or serve as an anchor for: He anchored the evening news. |
| 15. | to drop anchor; lie or ride at anchor: The ship anchored at dawn. |
| 16. | to keep hold or be firmly fixed: The insect anchored fast to its prey. |
| 17. | Sports, Radio and Television. to act or serve as an anchor. |
| 18. | at anchor, held in place by an anchor: The luxury liner is at anchor in the harbor. |
| 19. | drag anchor, (of a vessel) to move with a current or wind because an anchor has failed to hold. |
| 20. | drop anchor, to anchor a vessel: They dropped anchor in a bay to escape the storm. |
| 21. | weigh anchor, to raise the anchor: We will weigh anchor at dawn. |
an·chor (āng'kər)  (click for larger image in new window) n.
v. tr.
Nautical To drop anchor or lie at anchor. [Middle English anker, ancher, from Old English ancor, from Latin ancora, anchora, from Greek ankura.] |
"Anchors are of various sizes. The largest is the SHEET-anchor; next in size are the BOWER-anchors, hung in the bows of ships; the smallest is the KEDGE-anchor." [OED]
Anchoring
The use of irrelevant information as a reference for evaluating or estimating some unknown value or information. When anchoring, people base decisions or estimates on events or values known to them, even though these facts may have no bearing on the actual event or value.
Investopedia Commentary
Here's an everyday example: a friend asks how much you pay in rent for your 800-square-foot apartment, and then asks how much a 1,100-sq-ft apartment would cost to rent in the same building. Would you make an estimate by adding a little more to what you pay even if you've no idea of the actual costs? If so, you would be anchoring your estimate onto what you pay for your apartment.
In the context of investing, investors will tend to hang on to losing investments by waiting for the investment to break-even at the price at which it was purchased. Thus, they anchor the value of their investment to the value it once had, and instead of selling it to realize the loss, they take on greater risk by holding it in the hopes it will go back up to its purchase price.
Related Links
Taking A Chance On Behavioral Finance
Trading Psychology: Consensus Indicators - Part 1
Assessing Market Behavior with the Herrick Payoff Index and New High-New Low Index
See also: Behavioralist, Mental Accounting, Prospect Theory, Regret Theory, Risk Adverse
