He buys $100 million worth of X stock. People follow and buy $100 million worth of the same X stock, stock is now wanted and goes up in price, Buffett sells his shares and profits.
Why is this not happening?
In: Economics
Two things:
When you see a headline saying “Buffett has bought X”, it’s because the transaction has just been *reported* (in a government-mandated SEC filing), not because it just *happened*.
Information is power, and big institutional traders like Buffett want to give away as little of it as possible. So, they break their trades up into many small chunks so that they blend in with normal activity and they only announce their trades when the government requires them to.
The government doesn’t necessarily require trades to be reported immediately, so the purchase you are reading about may have taken place over months and wouldn’t be feasible to immediately undo.
But let’s hand-wave all of that away and pretend that Buffet could buy up a bunch of stock, announce it, and immediately dump it. That would only work once, as investors would learn that he planned to do that and not follow.
Lastly, Berkshire Hathaway is worth $460 billion at present. Pumping and dumping $100 million worth of shares would be about as useful to them as finding a penny on the ground would be to you.
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