Following in the stock market footprints of Warren Buffett has been one of Wall Street's favorite games for a long time. The market just can't help but do what Buffett does. Or buy what he buys. Or sell what he sells. Wall Street dubs it the "Buffett Effect."
And why not? Buffett, the chairman of Berkshire Hathaway, is among the best investors ever.
"When the greatest investor of our time takes a big position in something, it moves markets," says Gary Kaltbaum of Kaltbaum Capital Management.
The "Buffett Effect" was at play Wednesday following news that Buffett's Berkshire Hathaway had nearly quadrupled its stake in iPhone maker Apple, dumped virtually all of its Walmart stock, and added aggressively to stakes in airlines. Shares of American, Delta, United-Continental and Southwest airlines rose 2% to 3.6%. Walmart shares eked out a 3-cent gain.
Apple got a boost, too. Buffett boosted his Apple stake to 57.4 million shares in 2016's final quarter, up from 15.2 million shares on Sept. 30. Buffett has enjoyed an estimated gain of $1.1 billion this year as Apple shares have rallied 17% to $135.51 from $115.82. The move suggests Buffett sees opportunity despite critics who say Apple has lost its innovative edge. Apple, which hit a record Monday for the first time since 2015, rose 0.4% Wednesday to a record $135.51. Investors are "just now catching on to what he sees,"Commonwealth Financial Network's Brad McMillan says.
Investors that want to buy what Buffett's already bought might want to reconsider. The "Buffett Effect has no lasting or long-term implications," says Baird strategist Bruce Bittles.
Warren Buffett joins CNBC's "Squawk Box" on Monday, February 27, to answer your questions following the release of his annual letter to Berkshire Hathaway shareholders. Post your questions on Twitter or Facebook using #Ask Warren.
Correction: This story was revised to correct the spelling of Buffett in a headline.