nannan66

with regards to anchoring - not sure that someone should buy after a positive earnings surprise. given that there was a positive earnings surprise - something was missing in the analysis. not all known factors were incorporated. That was the reason for the positive earnings surprise. if an analyst incorporates all known information, there would be no more any reason for the earnings surprises. based on all known information - if someone now bought that stock - based on supply and demand - it's price would further go up. and then the returns on that stock based on the price you now bought it at, is not going to be as high.

representativeness - is like Stock A succeeded, so let me invest more in it. again just based on history, without doing any analysis. if all known information is not incorporated, you would end up with the same results as in the anchoring case.

so I think the main takeaway is - do not be biased by past history, but incorporate all known information before a buy/sell decision is made.

CP