Your Purchase Price Isn't the Market's Reference Point
Opening question: you bought at €40, it's now €30. Does the market know or care that you paid €40? No.
Why this matters for beginners
Your break-even point is personal. Decisions work better when based on what is known now. This is general education, not personal advice; neither selling nor holding after a fall is automatically correct.
Main explanation
Your personal break-even point is the price you paid. Other investors don't see it, so it doesn't pull the price anywhere.
Anchoring is fixing on one number, like your purchase price, and judging everything against it.
Sunk-cost thinking is letting money already spent drive the next decision. The €10 drop has already happened either way.
Better questions: what new information is there about the company? What opportunities and risks are available now?
Sometimes the honest answer is that there isn't enough information yet to justify either choice.
Example using a real company
Three investors in fictional Harbor Toys, all bought at €40, price now €30.
- →Anna: 'I'll sell once it's back to €40.' Her plan rests only on her own purchase price.
- →Ben: Harbor Toys lost its biggest customer. That is new information about the company, worth weighing on its own.
- →Chris: the price fell, but he hasn't read any news or results. He doesn't yet have enough information for a justified decision.
Common beginner mistakes
- ✕Waiting to 'get back to even' as the only reason to hold.
- ✕Selling or holding automatically after a fall without new information.
Key terms
- Anchoring
- Relying too heavily on one reference number, such as your purchase price.
- Sunk cost
- Money already spent that can't be recovered by the next decision.
Key takeaways
- 01The market doesn't know your purchase price.
- 02Judge with current information, and admit when it's not enough.
Check yourself
- 01Does your purchase price influence where the share goes next?
- 02What is anchoring?
- 03Chris hasn't read any news since the fall. What's his situation?
Try the concept on a real company
Open a company you follow in the Analyzer and focus on what's new, not on where you'd break even.
Educational examples only. Not buy or sell recommendations.