Buffett Sends Message to Stock Market

When Warren Buffett speaks (and, more importantly, acts) the stock market listens.

The market may not always follow his moves precisely, but you can bet many in the stock market note whether he is bullish or bearish.

He is definitely bullish these days with the acquisition of Burlington Northern Santa Fe railroad - a $44 billion investment.

Some pundits have labeled the move a "bet," but Buffett doesn't bet.

Every move he makes is well thought-out and, for the most part, geared toward a long-term investment.

Why is his acquisition of a railroad important?

Transportation stocks (railroads, trucking firms, but not necessarily airlines) do well when the economy is strong.

They suffer when the economy is bad and there are fewer goods to move around.

Buffett's acquisition of a railroad is testimony to his confidence in the U.S. economy. Transportation, including railroads, will see increased traffic as the economy grows.

He has become the most successful investor in history by buying where others failed to see long-term potential - in other words, Buffett is a value investor.

Too often these days, stock investors hear that long-term investing is a losing game - that market fluctuations will wipe out any gains.

Buffett reminds us again that a long-term perspective is still one road to investing success, but it is not a road investors should follow with their eyes closed.

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