There are legitimate reasons that even savvy investors lose big money in the stock market. Unless you're inclined to make periodic moves into and out of equities, after all -- almost always a sucker's bet -- you'll have to ride the roller coaster of short-term performance gyrations. And as the last couple of years have made painfully clear, even folks who have done their investing homework can get crushed when Mr. Market lurches into baby-with-the-bathwater mode.

Case in point: Warren Buffett. We at the Fool often cite the Oracle of Omaha, because his investment philosophy dovetails with our own: Be a buyer of businesses, not a short-term speculator. When it comes to holding periods, your favorite time frame should be forever.

And then there are Buffett's two cardinal rules: 1) Don't lose money; and 2) Don't forget rule No. 1.

And yet ...
Over the past year, Buffett's Berkshire Hathaway (NYSE:BRK-B) holding company has gotten crushed by some 30%. Several of Berkshire's stock holdings have fared badly: Both American Express (NYSE:AXP) and CarMax (NYSE:KMX) have dropped significantly, while his big bet on ConocoPhillips (NYSE:COP) has tumbled by some $2.7 billion!

Buffett now regards his enormous investment in Conoco as a "major mistake of commission," criticizing in particular "the terrible timing of my purchase [that] cost Berkshire several billion dollars."

Ouch. Even Oracles can misfire, particularly when it comes to the question of "timing" an investment in a company so tightly tethered to the global economy's inevitable ebb and flow. Those kinds of concerns especially require patience -- not near-term hand-wringing.

Buffett knows that, and he has plenty of patience, of course. We Fools, however, can profit from the error embedded in his assessment (not his investment), out-Buffetting the Oracle himself by: 1) Buying shares of extremely wide-moat companies trading at discounts to their long-term prospects; and 2) leaving near-term "analysis" to the squawking heads on CNBC.

Beat COP
What does the example of ConocoPhillips tell us about Buffett the investor, and how can we apply that to our own portfolios? Good questions both, and as the Oracle reiterates every year in his letter to shareholders, he and sidekick Charlie Munger are on the lookout for improving earnings and widening moats, among other assets.

The moat part of COP's story is easily grokked. Barriers to entry in its industry are enormous, and only the biggest of boys need apply, as the company's very short list of meaningful rivals attests. On the earnings front, though, the story gets trickier. Yes, COP has grown earnings over the last five years by an annualized rate of 16%. But amid the global economic downturn, analysts expect that torrid pace to reverse: The consensus forecast calls for the energy behemoth to see its earnings shrink by 66% this year.

Even though Buffett's timing was so wrong, he's holding onto the majority of his shares, since he presumably likes the company's current valuation: "I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price."

Other value investors might want to take a closer look, too. Despite the expected earnings decline, the company trades for just 8.6 times estimated earnings -- less than competitors such as Chevron (NYSE:CVX), BP (NYSE:BP), and ExxonMobil (NYSE:XOM).

Opportunity knocks
This mayhem, in fact, has presented an opportunity that should cause dyed-in-the-wool value hounds to lick their chops and to review their holdings, with an eye toward dialing up positions in those fundamentally sound holdings that, for reasons unrelated to fundamentals, currently sport bargain-bin price tags.

In addition to gauging your holdings for their, um, moat-a-bility and earnings-growth potential, though, be sure to zero in on the quality of the management team as well. Buffett can no doubt pick up the phone and chat with Ken Chenault of American Express or Tom Folliard of CarMax whenever he'd like, but we mere mortals can use proxies such as return-on-equity (ROE) and return-on-assets (ROA). These key profitability metrics go a long way toward helping investors assess management's talent for wringing profit from their companies' capital. Then, too -- and for smaller companies especially -- the level of inside ownership can be a key indicator of just how invested managers are in the company they run. Literally.

The Foolish bottom line
It's been a difficult year for most investors, The Oracle included. But Buffett's been in situations like this before, and he knows that patient investors on the lookout for stocks with strong moats trading for bargain prices will be rewarded when the market recovers.

Our Inside Value team agrees with Buffett, and it sees a number of companies with strong moats trading for bargain prices these days. For instance, one current recommendation has consistently posted double-digit, industry-surpassing ROE and ROA figures, and insiders hold nearly 30% of its shares. But despite a growing demand for its products and a rich earnings-growth history, the company trades well below industry-average multiples. I'm a big fan of this firm; indeed, I own shares. And the company looks like a stone-cold bargain just now.

My hunch is that even Buffett would agree, which would, of course, make him exactly right. Or so says me. Click here for a free 30-day guest pass and see for yourself. There's absolutely no obligation to stick around if you find it's not for you.

Shannon Zimmerman runs point on the Fool's Ready Made Millionaire investment service. Berkshire Hathaway and American Express are both Inside Value selections and Motley Fool holdings. Berkshire is also a Stock Advisor pick. You can check out the Fool's strict disclosure policy right here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.