# Anchoring On Your Buy Price

_Market Mechanics + Behavioural . 2026-05-09 . By Tanmay Kurtkoti. Educational, illustrative, not advice._

Saturday morning. Filter coffee. My buddy slides his brokerage app across the kitchen counter and shows me a position that has been red for three years.

His plan is to wait. Until it comes back to break even.

I asked him a question that took him a minute to answer. Who told the stock you bought it at that price?

The market never agreed to his entry. It does not even know he exists. The only person tracking that buy price is the one losing money waiting for it to mean something. Behavioural finance has a name for this. The disposition effect. Terrance Odean published it in the Journal of Finance in 1998 after running the data on ten thousand retail brokerage accounts.

Here is what he found. Investors realised gains at 14.8 pct of the time they could have. Realised losses at 9.8 pct. The disposition ratio is 1.51. Winners get cut fifty-one pct faster than losers, across every account, every year, every regime. The brain marks the entry price as a flag. Anything below it feels like an unfinished trade. So the position waits. And rots.

The cost of the rot is the part nobody runs.

Rs 1L stuck flat for five years stays Rs 1L. The same Rs 1L moved into a diversified equity allocation at 12 pct gross compounds to Rs 1.76L. The gap is Rs 76234. Per stuck position. Per five years. It is invisible on the brokerage statement because the loss lives in the line that was never opened.

Sunk costs are sunk. The 22 pct loss is already paid. Holding does not unpay it. You are now choosing between two future positions, not undoing a past one.

The honest test for a red and frozen position is not whether it will recover. It is whether you would buy it again today, at this size, knowing what you know now.

If the answer is no, the answer was no a year ago too