Just when we're struggling to make sense of stock market's daily palpitations, the Oracle of Omaha comes along with a $26.3 billion offer for the shares of Burlington Northern Santa Fe [ticker: BNI] he doesn't already own and provides some insight to defog the befuddled brains of average investors.

The cash and stock deal, which prices the Fort Worth, Texas-based railroad at $34 billion or $100 per share, is being made through Warren Buffett's Berkshire Hathaway [BRK.A, BRK.B]. The Omaha, Neb., holding company, whose portfolio includes other railroads, insurers and utilities, already owns nearly 23 percent of Burlington's shares.

Let's get one thing straight: Putting his genius aside for a moment, Mr. Buffett is not your average investor. He's more like Goldman Sachs or a private equity firm. With billions at Berkshire's disposal, Mr. Buffett has opportunities not available to the average investor, such as the General Electric preferred shares he purchased last year that pay a 10 percent dividend.

"That's what people don't understand," says Jeff Mindlin of the Pittsburgh-based Mindlin Fund.

That said, there's plenty to be learned from what Mr. Buffett calls "an all-in wager on the economic future of the United States." There's more to that story than rail traffic picking up as the economy recovers.

As Mr. Buffett said in a CNBC interview, Burlington Northern used on average one gallon of diesel to move one ton of freight 470 miles last year. That kind of efficiency will give it and other railroads an edge over their trucking and air freight competitors as the price of gasoline rises.

"What's going to be the most cost-effective play going forward? It's going to be the railroads. That's his play here," said Brian Bruce, a professor at Southern Methodist University's Cox School of Business.

He calls the transaction "a classic Warren Buffett investment" in that it reflects Mr. Buffett's strategy of purchasing companies with "economic moats" around them. For Burlington Northern, one of the moats was its ability to maintain pricing power through the downturn, something that also appeals to Jason Pride, research director for Haverford Investments.

"We're right along side of him with this," he said.

The Philadelphia investment firm doesn't own Burlington Northern shares but does have a position in Union Pacific [UNP] -- a railroad Berkshire also has invested in -- based on the same underlying themes Mr. Buffett believes in, Mr. Pride says.

"He's a very long-term investor and his statement that this is an all-in investment in America is extremely true when it comes to railroads," Mr. Pride said.

Mr. Mindlin, whose fund invests in the stocks of commodities producers, believes that the Burlington Northern deal will be "one of the seminal purchases of the recovery." Owning a railroad is like owning a toll booth, Mr. Mindlin says, adding that retaining Burlington Northern's strong management will provide stability to Berkshire's portfolio as the aging Mr. Buffett scales back his involvement.

He believes that the investment also is a huge bet on coal, which accounted for 26 percent of the railroad's $10.3 billion in revenue in the first nine months of this year and 22 percent of 2008 revenue of $18 billion. More than 90 percent of Burlington Northern's coal freight originates in the Powder River Basin of Wyoming and Montana, coal Mr. Mindlin said can be exported to meet demand in China and India.

"That may be part of the way he's playing China's development," Mr. Mindlin said. "It's tuning into the fact that these developing economies want hard physical assets."

Dr. Bruce agrees.

"In the next five to 10 years, coal demand is not going to be driven by the United States. It's going to be driven by some of the more emerging markets," he said.

Burlington Northern stock, trading in the mid-$70s when the agreement was announced Tuesday, rose in response to the $100 per share price tag, finishing the week at $97.23, up $21.91 for the week. Shares of other railroads and the Dow Jones Transportation Index went along for the ride.

"I definitely felt the other day like I was riding his coattails," Mr. Pride said.

As impressive as last week's run-up was, on a percentage basis it falls short of Burlington Northern's rise since March 9 when it closed at $51.20, its lowest daily finish this year.

"If [Mr. Buffett] had his druthers, he would have preferred to make the acquisition in March, but his timing is not that bad," Mr. Pride said.

And that, perhaps, is the greatest lesson the average investor can take from Mr. Buffett. Don't try to time the market by waiting for what you think will be the absolute low. Do your homework to find companies that, over the long haul, will provide acceptable returns based on your analysis of them, their markets and the economy. Then buy them at acceptable prices.

When Mr. Buffett does his homework, he looks for "good franchises and defensible positions in their industry" and holds onto them, Dr. Bruce said.

"He doesn't have a history of being someone who swoops down and grabs things at the very cheapest price," he said.

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