The tendency of naive investors to buy high (after prices have risen for several periods) and sell low (after prices have dropped for several periods) can be explained by the behavioral tendency known as

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Anchoring is the tendency to rely too heavily on the first piece of information received when making a decision. In this case, naive investors may be anchoring their decisions to the high prices they see after a period of rising prices, and the low prices they see after a period of falling prices.

The Tendency of Naive Investors to Buy High (After Prices