Making Money In This Market

Warren Buffett, a.k.a. the "Oracle of Omaha" for his savvy investments, is shopping his way through the financial crisis. Even before Washington passed the bailout bill, his Berkshire Hathaway holding company had put $3 billion into General Electric and $5 billion into Goldman Sachs, and he admits he's trawling for more good deals. "You want to be greedy when others are fearful ... It's that simple," he said in a PBS interview with Charlie Rose, adding that Americans are as fearful now as he's ever seen them. "We're seeing [stocks] that are attractive right now." His disciples agree. "It's nirvana for us, we're buying things hand over fist right now" says self-described Buffett junkie Whitney Tilson, managing director of the T2 Partners hedge fund.

But just because Buffett and still-cash-rich hedge funds are betting on the market to rebound, does that mean average investors should ante up? [Disclosure: Buffett is a member of the board of directors of NEWSWEEK's parent, The Washington Post Company.] Let's assume for a second that you believe in business cycles and see a future in which financial health returns. Chances are you considered buying shares on days like Monday (Sept. 29), when the market fell 778 points, or Thursday (Oct. 3), when it dropped another 348. Of course, not everyone has Buffett's deep pockets or the ability to negotiate deals that everyday investors can't get. Both Goldman and GE are paying him 10 percent interest on his investments, for example. Good luck finding that.

Still, employing Buffett's thrifty lifestyle and his investment principles might actually enable you to make money in this market—or at least position yourself for future prosperity. That is, if you proceed with caution. Here's what Warren might do if he were you.