The volatility in the market these days has been extreme -- so much so that it's hard to feel confident that anything is the right move. You buy good companies at new, lower discounts, only to have them drop by 5% the next day. You practically need a crystal ball to have any success.

The best advice for times like these comes from Bruce Berkowitz at Fairholme Funds (FUND:FAIRX). When asked how to predict where the market would go, he replied: "You can try to predict what's going to happen, or you can prepare for whatever happens. We take the strategy of preparing."

In other words, don't focus your energy on picking stocks that require your predictions to come true. Look instead for stocks that will do well over the long term, regardless of what happens. With this perspective, a lot of reasonable-sounding strategies just don't make sense anymore.

Put away that crystal ball
For instance, momentum investors might consider Alpha Natural Resources (NYSE:ANR) an attractive buy since, in the last year, it's gone from under $20 to over $100. But you can't really "prepare for anything" with momentum investing -- because you're not prepared for what happens if the momentum turns.

Similarly, "prepare for anything" suggests that you should be careful when looking at fashionable stocks or those that are dependent on hyper-growth for success. For instance, Energy Conversion Devices (NASDAQ:ENER) and SunPower (NASDAQ:SPWR) are trendy solar stocks, and both have five-year annual growth estimates of 35%-plus annually. But the expectations for that growth have already been priced in. And if their growth slows or the excitement over solar energy leads to a market saturated with competition, both these companies could be clobbered. Not prepared for everything.

An equally poor strategy would be investing in cyclicals that look cheap, but really need the market to turn in order to survive. For example, the returns from UAL (NASDAQ:UAUA) could be excellent if the price of oil drops and we avoid a bad recession. But if oil keeps going up and the economic slowdown worsens, airlines will face difficult times. It's another company that isn't prepared for anything.

In Berkowitz's words, "We see no reason to play Russian roulette."

Choose inevitable success
Berkowitz focuses on stocks likely to generate great returns regardless of what happens -- and thus he's not required to predict the future in order to be successful.

He achieves this by buying stocks that look cheap based on cash in the bank and their ability to generate new cash. If you can buy a profitable business with good management for less than the cash it already has, it doesn't really matter what the market does. Similarly, if you can buy a business that generates a lot of sustainable cash flow for a cheap price, it's hard to lose money over the long term.

Fairholme's winning picks
"Prepare for anything" doesn't mean, for instance, that you should never buy cyclicals. Fairholme's second-biggest holding is Canadian Natural Resources (NYSE:CNQ), an oil sands company. The company has such large reserves and such huge potential to grow its output that Berkowitz believes that the price will go up, even if oil goes down.

Fairholme also holds Mohawk Industries (NYSE:MHK), one of the two major flooring manufacturers. The housing bust has hurt the company, but its high cash generation makes it likely to be a profitable long-term investment.

In both cases, short-term issues were irrelevant because the cash these businesses could generate over the long term made them likely to be winners. Short-term price corrections were simply buying opportunities.

The Foolish bottom line
Of course, buying businesses that are prepared for whatever happens doesn't mean that these stock are immune to bad times; Fairholme itself has lost money this year. Rather, it means buying stocks that are almost certain to outperform over the long term -- a goal that Fairholme has achieved handily with returns of 17.2% versus the S&P 500's 1.2% since the fund's inception.

Our Motley Fool Inside Value team is focused on finding the same sorts of undervalued stocks that generate huge amounts of cash -- and we're loving the buying opportunities provided by the recent volatility. If you're interested in reading about our top picks, we offer a 30-day free trial. Click here to get started.

Fool contributor Richard Gibbons displays uncanny inaccuracy when predicting the future. Fairholme is a Champion Funds pick. The Fool disclosure policy has never been quite the same after that day at the farm.