Berkshire Hathaway stock hit an eight-month high this week. The company did not announce a product. It did not cure a disease. Warren Buffett did not emerge from his office with a new investment thesis scrawled on a napkin. The shares just went up because other shares went up first.
This is what passes for financial news now. A stock that was at this exact price eight months ago returned to that price, and we're supposed to act like it means something. The breathless implication is that Berkshire might "catch up" to the S&P 500, as if stocks are kindergarteners running a relay race and the slow one just needs encouragement.
Retail traders saw this headline and immediately opened their brokerage apps. They checked the chart. They squinted at the candlesticks. They convinced themselves they spotted a breakout pattern that definitely was not just random price movement. Then they bought shares at the eight-month high, which is the financial equivalent of arriving at a party right as the cops show up.
The S&P 500 is up. Berkshire is up less. Therefore Berkshire must go up more to catch up. This is the kind of logic that sounds smart until you say it out loud in front of someone who finished high school. It assumes markets are a justice system that corrects underperformance by mandate. They are not. Sometimes stocks just sit there like a drunk uncle at Thanksgiving. Sometimes they go down. Sometimes they go up for no reason and then back down before you can spell capital gains.
Buffett has been saying for decades that he does not care about short-term stock movements. His shareholders just bought at an eight-month high because a newsletter told them to.
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