It took him long enough.

At the end of 2004, Warren Buffett's Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) had around $44 billion in cash. Ditto for 2005. And 2006. And, yes, 2007 as well.

At one point, more than 20% of Berkshire's assets were earning money-market returns. While armchair investors complained that the company had amassed too much capital to continue its market-thrashing ways, Buffett simply sat on Berkshire's enormous pile of cash. And waited. And waited. And waited some more.

He refused to buy until the time was right.

The time is right
Buffett has called the current mess an "economic Pearl Harbor." He has also said, "In my adult lifetime, I don't think I've ever seen people as fearful economically as they are now."

These aren't just words. Mr. Greedy-When-Others-Are-Fearful has been stuffing money where his mouth is.

That $44 billion Berkshire had at the beginning of this year? By the end of June, Buffett had spent it down to $31 billion in deals including Berkshire's purchase of Marmon Holdings, the Mars purchase of Wrigley, and the Dow Chemical (NYSE:DOW) takeover of Rohm & Haas (NYSE:ROH). He even bought up auction-rate securities at bargain prices.

And lately, he's been accelerating. It's nice to have cash when the credit markets are frozen.

In just the past month, he has committed:

  • $4.7 billion to purchase Constellation Energy (NYSE:CEG) for $26.50 per share. (It had been trading above $100 at the beginning of the year.)
  • $5 billion to purchase perpetual preferred stock in Goldman Sachs (NYSE:GS). He not only gets the hefty 10% dividend but also receives warrants allowing him to buy $5 billion of common stock at $115 per share.
  • $3 billion to General Electric (NYSE:GE) under terms similar to the Goldman Sachs deal -- except the preferred stock is callable for a 10% premium after three years. The warrants allow him to buy stock at $22.25 per share.

That's more than $20 billion spent this month if he chooses to exercise those warrants. Buffett's back, baby!

Buffett's buying. Should you?
Historically, average investors could simply ride Buffett's coattails to huge returns (think double the market's returns). But this time is different.

Buffett got sweetheart deals on both Goldman and GE. In the case of GE, he's earning 10% dividends on a company rated AAA -- and if he buys the warrants and they pan out, he'll earn even more.

When Buffett made these deals, he was providing much more than just capital. He was lending his credibility -- and that meant Goldman and GE were willing to give him great deals in the hopes that his name alone would stabilize their stock prices for follow-on offerings.

In other words, don't buy into Goldman or General Electric just because Buffett has.

Learning from Buffett
Instead of buying what Buffett is buying, we should look to what his strategy has to teach us. So what can we learn from Buffett's shopping spree? Two things:

  • Invest for a lifetime.
  • Compile a watch list of attractive companies.

Buffett's pushing 80, but he hasn't been panicking and trying to make a quick buck, no matter what the market has done. Rather, he's been investing for the long term, and in the past few years, that's meant waiting for opportunities to present themselves. Now that they are, he's striking with a vengeance.

And because of his patience, he hasn't had to compromise -- and he's getting great companies at great prices. When Constellation Energy's price dropped so precipitously in mid-September (from above $60 to the $20s), he was ready to pounce. Goldman and GE may have approached him, but you can be darn sure that he'd already done the bulk of his research beforehand.

Follow Buffett's lead
To be great investors, we need to be similarly prepared. In volatile times like these, Mr. Market presents us with loads of great values -- but just because a stock price has fallen, that doesn't mean a given company is a good value.

A prudent way to take emotion out of the equation is by compiling a list of companies you'd love to own for the long term and the prices you'd love to pay. When one of your favorite companies goes on sale, you can revisit your list, ensure your investing thesis is still intact, and bend it like Buffett.

If you're looking for some help compiling your list, you can see what Fool co-founders David and Tom Gardner are recommending to subscribers at Motley Fool Stock Advisor. Like Buffett, they look for premier companies that they can hold for the long term -- and you can view their recommendations free for 30 days. There's no obligation to subscribe.

Anand Chokkavelu doesn't own shares in any of the companies mentioned. Dow Chemical is a current Motley Fool Income Investor recommendation, and Constellation Energy Group is a former pick of that service. Berkshire Hathaway is an Inside Value and Stock Advisor pick. The Fool owns shares of Berkshire Hathaway and has a disclosure policy.