The Power of a Brand
A bit of an amusing story about the power of a brand to influence investors. In this case the “brand” is Warren Buffett.
Winner of Lunch With Warren Buffett Gets a Windfall
A Chinese businessman named Zhao Danyang paid a record $2.1 million in a charity auction on eBay last year to win a lunch date with one of his heroes: Warren E. Buffett
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But a day before the lunch, which took place on June 24 at the Smith & Wollensky steakhouse in New York City, Mr. Zhao told the media he would offer Mr. Buffett a stock tip of his own: a little-known Chinese retailer called WuMart.
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By the time he returned to China, the shares were about 25 percent higher and Mr. Zhao’s stock holdings in WuMart (which he insists will some day be China’s Wal-Mart) were worth about $16 million more.
Perhaps the economists who believe in the rational investor model can explain how just mentioning this obscure stock to Buffett is going to do anything for the business. I can guarantee that Buffett would never invest in such a firm. It doesn’t meet any of his criteria (low risk, high returns, steady growth prospects and being currently “undervalued”).
I give Mr. Zhao credit, however, he has adopted all the techniques of the robber barons of the first Gilded Age, like Jay Gould. Pump up your stock, sucker in the gullible and move on to the next play. I wonder if they teach this sort of thing in business school?