Biases

Anchoring Bias

Q.  You collected couple of CDs to drop into your shopping cart when you realised that the store had a 50 per cent discount on them till a fortnight ago. Would you still buy the CD’s now?

- Peeved with myself for missing the sale, I will place the CDs back on the shelf and wait for sale..

-I will buy the CD’s at the regular price.

Q. Suppose you bought 100 Suzlon energy shares at Rs. 45 per share. The price falls to Rs. 35 per share. In a weeks time it falls further to Rs. 30 per share. What would be your course of action?

-I will likely hold the shares and wait for the price to come up again.

-I will sell the shares as it is in a bearish trend.

Q.Suppose you are long crudeoil futures, your technical analyst says crude oil prices will soar to 115 $ per barell. Crude oil prices reached 112$ per barell and started falling thereafter.It moves in the range of 105-108$ for a week. The current price per barell is 100 $. You are still in the money.What would be your course of action?

-I will wait till the prices climb up to 115 $ per barell again.

-I will sell the crude oil futures at $ 100 per barell .

-I have already sold it at $ 106.

Q. Suppose you read an article and feel compelled to buy a stock. You also notice that the stock was recently trading near its 52-week low. You then realise that it has moved up 10 per cent in one week. What would you do?

- I will buy when the stock drops again.

-I will buy the stock now as it’s still a buy call.

Q. You saw the price of Silver trading at 50.15 per ounce. You had bought at 30.35 per ounce a year ago. Currently bullion is seeing a down trend. It fell to 35.75 per ounce and further to 31.50. All factors suggest it may fall further. What would be your course of action?

- I will wait till price climbs up again.

-I will sell it now and re enter the deal by buying it at a lower price.

-I will sell and get out of the deal.