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Don't Anchor on These Stock Prices

This video is part of our "Motley Fool Conversations" series, in which analyst Rex Moore discusses topics across the investing world.

Today Rex and analyst Buck Hartzell dive into the concept of anchoring. Anchoring may work well for boats, but in investing it can really sink your returns if you're not careful.

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Buck Hartzell has no positions in the stocks mentioned above. Rex Moore has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Intuitive Surgical. Motley Fool newsletter services recommend Apple, Intuitive Surgical, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (8)

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  • Report this Comment On April 08, 2012, at 11:36 AM, steveat wrote:

    I understand what you mean, especially with the APPL example, but for the small investor, it doesn't make sense to purchase a stock unless you can at the VERY least buy 100 shares. For APPL that's 60+ grand.

    I can (myself) only deal with small caps until I build my portfolio and really can't afford to purchase more than 100 shares per company or I would be putting all my eggs in one basket which is not what I want to do.

    What's the best way to build wealth when you don't have much to begin with. Sure, I can do DRIPS, but to me..DRIPS are only for stocks that I want to hold onto for the longrun. I'm more interested in short term gains.

  • Report this Comment On April 08, 2012, at 3:01 PM, daveandrae wrote:


    I could not disagree more.

    My Uncle, who gave me the best financial advice I have ever heard in my life once told me, "its not the amount that you save, it is the c-o-n-s-i-s-t-e-n-c-y in which you save."

    Sixteen years ago, I put 2 dollars a day, away, when I began saving for my house. Today, 60% of it is paid off.

    Ten years ago all I could afford was 50 shares of Pfizer stock. Today, through dividend reinvestment and continued purchases, I now hold 2,382 shares.

    Again, when it comes to saving, don't think in terms of an "amount", think more in terms of having a "mindset", or being consistent.

    Month in. Month out. Year end. Year out.

  • Report this Comment On April 09, 2012, at 10:36 AM, TMFOrangeblood wrote:

    steveat, tell us why you think it only makes sense to buy at least 100 shares. That advice may have made sense many years ago when investors were charged more for buying in odd lots, but that hasn't been the case for a long time now.

  • Report this Comment On April 09, 2012, at 10:57 AM, FutureMonkey wrote:

    Steveat -- number of shares is irrelevant.

    Think of your dollar investment, not the number of shares you own. Don't avoid a company because you can't purchase 100 shares. The only number that matters is the dollar total. 100 shares just makes it easy to calculate, but is no more important than 82 shares or 12 shares or 133.8 shares (if you have an account that allows fractional shares).


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