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I have done the same, but have a real problem filling out my allocation if a stock goes up. I wait for the stock to go down, but sometimes it doesn't and it gets away from me. I can see that if I had made purchases even at an increased price I very often would still have made money on the stock, but I couldn't seem to make myself do it (sounds like a personal problem, I know).

I notice that in some cases you have purchased stocks for this portfolio that have increased in value from your original purchase.

Do you have a range-- + or - a particular percentage of your original price that you use as a guideline for additional purchases? Maybe considering time passed before you take a second bite? Or maybe you have a "Buy Below" price in mind when you make your purchases? How do you decide that an increased price is still doable?

Hi Bikerliz,

What you describe is a problem almost every investor faces, so don't think it's just you. It arises from anchoring -- fixing upon a price and then judging everything from that price. If a later price is lower, then you're getting a bargain and it's a lot easier to buy another portion. However, as you've noticed, if a later price is higher, it's much, much harder to buy some more. This hurts us as investors because, also as you've noted, those higher-priced purchases can still be great investments.

What I'm doing to help avoid that anchoring is to look again at the expectations priced in at the new, higher price. If they're still well below what I believe the company can do, and if the rest of the thesis remains intact, I'll go ahead and buy some more. In other words, I'm trying to judge each investment decision on its own merits, not in relation to when I first noticed the company or first bought it..

Anchoring is something that is really easy to do and quite hard to avoid. With practice, and certainly an awareness of it, it can be mitigated, though probably not eliminated. As I wrote, look at each purchase as if it were a fresh, brand new decision and is in no way related to any previous decision. (Actually, that's truly the situation.) Think about each decision independently on its own merits and you'll find that anchoring, while still present, won't stop you as often. At least that's what works for me (and I'm still working on it).

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