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by natalyarostova
2686 days ago
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> 2) if Warren buys something, other people will pile on and drive up the price, which helps drive his returns. While this is technically true, in the long-run the price of a firm will reflect reality as it exists, not as its perceived. And since Warren doesn't buy, then instantly sell when the price goes up, but rather holds for a long time. I don't believe we can attribute his returns to this phenomena. As a side note, the reason the price goes up is because he built a reputation of being able to pick undervalued stocks, therefore his purchase is a signal. |
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