Arguably, Warren Buffett is the world’s greatest investor since perhaps the Rothschild’s.

Yet the world’s premier investor extraordinaire is not immune to the destruction of stock market values since late 2007 as deflation attacks global markets.

Warren Buffet’s Berkshire Hathaway Class A stock has tanked a cumulative 42% since November 2007 versus 47% for the S&P 500 Index. From its peak in December 2007, Berkshire’s Class A stock has declined 49%; the Class A shares, which opened this morning at $77,000 per share, sit just above their 52-week low.

Big bets on insurance and other financial services investments have backfired over the last 12 months for Buffett. Some of the unrealized losses are quite substantial, including American Express, Wells Fargo and GEICO.

This is now the worst draw-down for Buffet since the 1973-1974 bear market, which took stocks down almost 50% in 21 months. This bear market is probably worse with the S&P 500 Index now 50% off its October 2007 all-time high 16 months ago.

Berkshire Hathaway sank as much as 6.2% last Friday amid concern the insurance and investment company could suffer big losses from bets on world stock markets and American banks. From its peak in December 2007, Berkshire’s stock market value has collapsed $118 billion dollars.

Yet according to Buffett, who remains steadfast about the long-term virtues of equity ownership, stocks now offer some of the best values in decades. The billionaire investor has been busy spending some of his company’s $40 billion dollars in cash to buy distressed assets since last year, including tailor-made deals on preferreds and convertible preferreds with Goldman Sachs and other banks after injecting several billion dollars into the wounded sector last summer.

According to Buffett, mentored by legendary investor Benjamin Graham (1894-1976), now is the optimal time to read or review The Intelligent Investor, published by Graham in the 1930s.

Buffett was recently quoted suggesting investors should read chapters 8 and 20 – especially useful in the midst of the worst financial crisis in 75 years.

Nobody is immune to losses in this market. Even the great Buffett is taking big hits. And he’s still a “buy and hold” investor sitting on a vast portfolio of global investments that have remained a fixture in Berkshire Hathaway for years, if not decades.

Still, timing is everything. An investor in Berkshire Hathaway since 1998 has not earned a profit. That should change soon as the Mother of all bear markets draws to a conclusion before the year is through.