Second, the acquisition says something about Mr. Buffett's mindset. He's willing to put a great deal of money into a company that he thinks will thrive. That means he believes the worst of the economic mess is over. This deal is the biggest one Berkshire Hathaway (BRK.A) (the holding company where Mr. B does all his buying) has ever done. Total investment into the railroad is $34 billion.

Here's how he described it: "Our country's future prosperity depends on its having an efficient and well-maintained rail system," Mr. Buffett said in a press release."Conversely, America must grow and prosper for railroads to do well. It's an all-in wager on the economic future of the United States," he added. "I love these bets."

Of course, he's got billions more in the bank, just in case this one doesn't go according to plan. At the end of the second quarter, there was $20 billion sitting idly, not earning much interest. But it gave Berkshire flexibility to strike when Mr. Buffett thought it was a good time. He's never been known to casually make a bet and hope for the best. In fact, he does his homework better than any other investor, and turns down many, many more deals than he ever does. The fact that he's willing to move now suggests that his analysis, his forecast, and his intuition tell him that it's a good time to be invested. And not timidly.

Berkshire already owned more than 20% of Burlington. Rail transportation has been one of the few businesses that has been able to maintain pricing power during the economic downturn, as high energy prices and an aging highway system drive up the cost of trucking.

Burlington Northern is a big player in the coal transportation business as well. Coal still generates more than half of the electricity in the U.S., according to the American Coal Foundation. According to Burlington's web site, the coal it hauls generates more than 10% of the electricity produced in the United States.

After the announcement almost all railroad companies saw their stocks move higher as investors ran after the Oracle of Omaha, hoping that all railroads will benefit when the economy heals. Some will.

The take away for most investors: be like Buffett. Have some cash available for great investments. Don't put all of it into one stock or company. Do rigorous due diligence so that you are very comfortable in owning the stock, no matter what the price does. That comfort comes from knowing how the company makes profits and understanding that sometimes the market will put great stocks on the clearance table even if it makes no sense.

Investing really is that simple: find great stocks and buy them when they're on sale. Diversify your portfolio so that no one stock will wipe out your investment portfolio. Stay in the market, up or down. Just like Mr. Buffett does.

Ted Allrich is the founder of The Online Investor, Chairman of the Board of Bank of Internet USA, as well as the author of the book Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.