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What Would Warren Buffett Do?

Thursday, 2 Aug 2007 | 5:17 PM ET

Stocks have been on the proverbial "roller coaster ride" the last several days, and that means increased nervousness for many investors. A series of triple-digit Dow moves, especially the losses, can make it tough to sleep at night.

But despite the turmoil, the angst, the worries for some, I have a strong feeling Warren Buffett is sleeping just fine. He's not looking at the day-to-day movements of the Wall Street indexes. He's looking for long-term investments in solid companies selling at a discount, as he always does.

The previous Watching Warren Buffett post this week, Buffett Basics for Troubled Times, touched on some of the timeless Buffett strategies detailed in a U.S. News and World Reports cover story. It's been a popular post, so I asked CNBC's Managing Editor Tyler Mathisen to videotape a short conversation with Buffett-watcher Alex Markels, a senior writer for the magazine and author of How to Make Money the Buffett Way.

What Would Warren Buffett Do?
Alex Markels, U.S. News and World Reports sr. writer, talks with CNBC managing editor Tyler Mathisen about how to apply Warren Buffett's investment philosophy during times of great market volatility.

The basic theme: What would Warren do when the markets are in turmoil? Tyler and Alex talk about the discipline needed to "smile and buy more" when a favored stock falls due to the whims of the market, but they also emphasize that today's market environment may not be actually generating any real opportunities for Buffett, who does not indiscriminately "buy on the dips." Alex also compares how Warren Buffett and CNBC's Jim Cramer might look differently at home builder stocks these days (although there is also a great deal of similarity in their stock picks, as we explored in this Great Mindspost from a few weeks ago.) Take a look and tell me what you think.

A FEW MORE LINKS

  • GuruFocus.com has launched an informal contest to see who can best predict Warren Buffett's major stock buys for the second quarter. His major portfolio moves will be revealed in SEC filings by the middle of August. Free registration is required to participate.
  • In a Bloomberg piece about the conclusion of an unsuccessful Broadway run for the musical "Grey Gardens," co-producer Edwin Schloss recalls some advice Buffett gave him 30 years ago: "He told me, `If the music is wonderful, with the best script in the world and the most gifted cast, just shut your eyes and say no.' I should've listened to him." Schloss tells Bloomberg he's giving up after more than three decades of ignoring that advice.
  • And in this week's The New Yorker, Bruce Wagner facetiously describes how he successfully bid $1.15 million dollars for a charity lunch with Warren, inviting along "Shia LaBeouf, David Milch, the disembodied cartoon voice of Antonio Banderas, the cable star Kyra Sedgwick, Jim Lehrer, Daniel Radcliffe, and the newly minted singing sensation Hannah Montana. (I’ve forgotten her real name.)" Try to top that, Mohnish Pabrai!

Actress/singer Miley Cyrus poses backstage during MTV's "Total Request Live" at the MTV Times Square Studios Monday, June 18, 2007 in New York.  Cyrus' latest album "Hannah Montana 2: Meet Miley Cyrus" hits stores June 26, 2007.  (AP Photo/Jason DeCrow)
Jason Decrow
Actress/singer Miley Cyrus poses backstage during MTV's "Total Request Live" at the MTV Times Square Studios Monday, June 18, 2007 in New York. Cyrus' latest album "Hannah Montana 2: Meet Miley Cyrus" hits stores June 26, 2007. (AP Photo/Jason DeCrow)

    Questions? Comments? Email me at buffettwatch@cnbc.com

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