Definition
Ownership alone inflates perceived value relative to identical assets not held.
Example
A trader refuses to sell a long-held stock even though better opportunities are available. The attachment to the familiar holding inflates its perceived worth, independent of fundamentals or relative attractiveness.
Cognitive Driver
Ownership increases perceived value. The mind associates possession with identity, effort, and familiarity. Once something is "ours," it triggers protective reasoning and inflated valuation, creating resistance to replacement.
Market Expression
Investors hold legacy positions despite deteriorating fundamentals. Old trades receive more patience and leniency than new ones. Allocation reviews favour incumbents. Portfolio drift emerges as inherited holdings persist without meeting the same standards applied to fresh ideas.
Trigger Conditions
- Long holding periods
- Significant past P&L swings
- Emotional investment or personal narrative tied to the position
- Portfolio reviews that focus on adjustments rather than clean re-construction
- Situations where familiarity feels safer than new opportunities
Diagnostic Markers
- Rationale for keeping a position relies on familiarity rather than forward value
- Inconsistent scoring standards between new and existing holdings
- Discomfort selling long-held assets despite weak relative merit
- Repeated defence of positions based on history, not outlook
- Limited turnover in parts of the portfolio regardless of opportunity cost
Cost Profile
- Opportunity loss from favouring legacy positions over better alternatives
- Reduced portfolio efficiency
- Accumulation of low-conviction or stale holdings
- Slower adaptation to regime changes
- Emotional inertia overriding analytical evaluation
Differentiation From Adjacent Biases
- Not status quo bias: endowment effect inflates perceived value; status quo bias preserves current state.
- Not sunk-cost fallacy: sunk-cost is about past effort; endowment effect is about ownership premium.
- Not confirmation bias: this is overvaluation due to possession, not selective evidence filtering.
Corrective Lens
Evaluate all positions as if the portfolio were being built from scratch today. Apply identical scoring rules to owned and unowned assets. Compare every holding with current alternatives to expose the ownership premium and restore objective allocation discipline.