Someone Stole Warren Buffett’s Halo
Also hedge-fund stakes, working from home, Robinhood disclaimers and bond market liquidity.
A standard theory of (part of) Warren Buffett’s success is that, at this point, his investments have a self-fulfilling quality. Buffett decides he likes a company, he buys a bunch of its stock, he says “I like that company so I bought its stock,” everyone says “wow Warren Buffett likes this stock, it must be good, I should buy some,” the price goes up, and Buffett has an immediate paper profit on his position.
Being able to make a stock go up just by announcing that you’ve bought it is a really valuable power for an investor to have, and if you have it you should be thoughtful about how you use it. For one thing, you should not use it indiscriminately: If you repeatedly use it on stocks that are actually bad, the people who follow you into those stocks will not make money, so they will stop following you and your power will go away.