How does the anchoring effect show up in investing?

Anchoring is the phenomenon in which, just as a ship that has dropped anchor cannot move, your thinking becomes tied to the first number or information you encounter, which then influences later judgments.

In investing, it can show up as judging that 'it will surely recover to that price', using a previous high or your purchase price as the reference point. You need to reassess based on current value and circumstances rather than past prices.