Take Advantage of Market Volatility. Buffett Is.

In the past few weeks, the stock market has taken investors on a good old fashioned roller coaster ride; gyrating wildly from dizzying rallies to crushing free-falls in what seemed like the blink of an eye. In fact, it's likely that since you last logged on to your online portfolio manager or spoke to your stockbroker, your investments have lost a great deal of value, despite today's rally.

The reasons for the market volatility are numerous. European debt concerns continue to plague the global marketplace, and coupled with domestic political uncertainty and lingering unemployment it is easy to see why many investors have lost confidence in the future. This loss of confidence has caused what many would call a fire sale on Wall Street.

But while some investors choose to log into their favorite portfolio rebalancing software, panic and sell in a weak attempt to anticipate the future, others, like billionaire investor Warren Buffett, are licking their lips for the opportunity to purchase their favorite stocks at a discount.

In an interview with CNN/Money earlier today, Buffett was quoted as saying "the lower stocks go, the more I buy." And for good reason. The most successful investor in history didn't get there by being a fool. Rather Buffett knows that the underlying companies that comprise the stocks in a seeming free-fall are solid, and have in most cases taken extreme measures to ensure their survival in the event of a secondary recession.

The markets may remain uncertain for a time. In the short term, investors may even continue to lose money.

But, if you are into do-it-yourself portfolio management, you know that buying stock in misvalued dividend paying equities trading at historically low P/E ratios is a great way to take advantage of the current market volatility, and almost guarantee yourself market beating returns over time.

So before you log into your favorite online broker or call your portfolio manager with plans to frantically sell your holdings to insulate your portfolio from the wild gyrations in the market, consider this: underlying corporate earnings remain strong, and stocks are trading at wildly discounted prices from their historical valuations, while in most cases maintaining a historically robust amount of cash on hand to weather the financial storm.

I intend to follow the lead of the most successful investor of all time, and buy some additional shares of my favorite companies, despite market volatility. How do you intend to weather the unpredictability of the current market? Are you a buyer or a seller? Respond in the comments section below.

Photo By: Perpetualtourist2000