Investors are always looking for an edge when buying stocks. In this segment of “The Morning Show” on Motley Fool Live, recorded on Feb. 14, Fool.com advisor Jim Mueller, and Director of Small Cap Research Bill Mann share a helpful tip to consider when pondering a purchase.
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Jim Mueller: It’s called anchoring, you’re anchored on that price. Your brain does it without even realizing it. Which journaling, writing down what you’re feeling, writing down what you’re thinking helps overcome that, helps at least makes you aware of it so you can fight against it. But one of the hardest things to do is, what David does so well is buy at higher prices. Because you see your basis, it’s $50 ago. You’re saying, why should I pay more because you feel regret because I should have paid or bought more back then. Adding to your winners is an easy saying, but it’s hard to do. Because of that anchoring.
There’s an experiment that’s been done over and over again. It’s with an audience that doesn’t really know the answer to the final question. The experiment, it goes like this. Take the last three digits of your telephone number, any telephone number associated with you, and add 400 to it. If your telephone number has the last three digits of 737, then you would make it 1137. Write that down. Once you’ve done that, in what year was Attila the Hun defeated during his invasion of Europe?
Bill Mann: 1984.
