Buffett's "buy now" call gets lukewarm reception

By Jonathan Stempel

NEW YORK (Reuters) - Warren Buffett tried to persuade demoralized investors the U.S. stock market is not falling off a cliff. Not everyone was immediately convinced.

The second-richest American and perhaps the world's most revered investor, says he is buying U.S. stocks for his personal account.

"A simple rule dictates my buying: Be fearful when others are greedy and be greedy when others are fearful," Buffett, 78, said in an opinion piece published Friday in The New York Times. "Most certainly, fear is now widespread."

As usual, he did not identify the stocks he is buying.

The piece -- titled "Buy American. I Am" -- called for confidence in U.S. business, something in short supply after the credit crisis spiraled into something resembling a market crash. Buffett has been relatively unscathed by the turmoil.

His buying excludes his stake in his insurance and investment company Berkshire Hathaway Inc (BRKa.N)(BRKb.N), which is committed to philanthropies and constitutes the bulk of his estimated $50 billion net worth.

He said if equities stay cheap, his non-Berkshire net worth will soon be 100 percent in U.S. stocks from 100 percent in government bonds.

In better times, such a clarion call from Buffett -- amplified Friday by repeated commentary on CNBC -- might spark a big stock market rally. Yet stocks ended another volatile session lower on Friday, after fresh economic data elevated worries about a potentially deep recession.

Buffett said he is not calling a market bottom. He may have company, including prominent investors such as GMO's Jeremy Grantham and BlackRock Inc's (BLK.N) Bob Doll who are betting equities have fallen below their intrinsic values.

HUGE STATEMENT

Yet equity investors appear resistant to efforts to unlock credit markets and shore up economies, which if they work could help extract stocks from their abyss.

Almost daily reassurances from President George W. Bush and Treasury Secretary Henry Paulson often seem to fall on deaf ears. A reworking of a $700 billion emergency U.S. rescue failed to soothe frazzled nerves. The Wall Street Journal said even prominent hedge fund managers are hoarding cash.

Ordinary Americans are worried, too. U.S. consumer confidence in October suffered its steepest monthly drop ever, the Reuters/University of Michigan Surveys of Consumers released on Friday shows.

The longer-term impact of Buffett's new approach to investing for himself remains to be seen.

"It is a huge statement. He does not come out and make statements of this kind very often," said James Armstrong, president of Henry H. Armstrong Associates in Pittsburgh, which invests one-fifth of its assets in Berkshire.