We are all guilty of anchoring. As we sail through the sea of knowledge, we throw our anchor overboard and sure enough, we rest upon a piece of information. We seem stuck on that point and we anchor to it. A gambler’s favourite rationalisation: ‘I’ll win it all back’; an Arsenal fan claiming they are a top European football team just because they once were a decade ago. But look, I’m an Arsenal fan, and although it hurts to say this, I anchored. I anchored to the past and on information that was simply outdated and I put too much weight on it.
After years of ridicule in the watering holes and forced lectures of other people’s opinions (mainly Tottenham fans), I came to see the situation in a different light. I concede, Arsenal are no longer a top European side, for now!
I needed to view the situation through a different lens. It’s hard to pull up the anchor and reassess one’s own view, but this can be far more important when it comes to decisions that will affect the rest of your life, your finances.
I often hear the anchored statements that prevent action, ‘investing is for fools’, ‘you’ll lose money’, ‘it’s not for me’. Similarly frightening statements that push action – ‘I’m missing out on the bitcoin train’. Often these statements are based on a past experience or an event that has tainted their view. The financial crash in 2008, Greece’s Debt Crisis, The Corona Virus Pandemic, the bitcoin boom, – too much weight is put on an event or past experience which taints reality.
This anchoring can have devastating consequences towards achieving what we want and we limit our lives and our future plans in the process. If you don’t invest, you don’t grow your money. Einstein was right – compound interest is the 8th wonder of the world. Similarly, if you invest poorly or without diversification, you’re at risk. I bet there are plenty of people out there who invested when a bitcoin was at 58,000 USD (Spoiler alert it’s now 35,000 USD at time of writing).
Now I’m not saying you must invest nor that bitcoin is a bad investment. We just need to be more self-critical and understand when we anchor. If speaking to others helps to view situations in a different light, do it. It could be the best way to pull up that anchor and sail towards more fruitful seas.