In response to a question on the Federal Reserve's massive quantitative easingprogram, Buffett said it will be "the shot heard around the world" when the central bank first indicates it will stop buying financial assets or start selling from their now enormous $3.4 trillion balance sheet. "we're in uncharted territory ... that's a lot of securities."

Because that liquidity has been supporting stock prices, people in the market will immediately reevaluate their positions.

Even so, he said, "the world won't end" and the market will survive. He repeated his long-held "faith" in Fed chief Ben Bernanke and said "we have benefited significantly, and the country has benefited significantly" by the Fed's actions.

Conceding the Fed's buying program is a "huge experiment," Buffett said, "This is like watching a good movie, and I do not know the end."

David Fuller's view I have mentioned the Fed's eventual ending of QE on a number of occasions, including in many Audios. It is probably the biggest known hurdle for markets. And yes, Warren Buffett's last sentence on QE in the article above is apt: "This is like watching a good movie, and I do not know the end."

And neither does anyone else. That is why it will be convulsive for the markets. Since we know it is coming, we also know how to prepare for it. And I can do no better than repeat some sagacious advice: If you are going to panic, panic early.

In other words, if you are thinking of selling when the crowd begins to sense that QE is ending, commence lightening at the first sign of a weaker market, even though that signal may be premature. Above all, avoid selling when investors are panicking as the market is experiences anything from a sharp correction to a cyclical bear market. Another tactic is to hedge your investment portfolio with some asymmetrical shorts in stock market futures, provided you do not do that too far into the setback..

Whether you sell some of you longs as the market begins to discount a reduction in QE, or hedge, or both - you will have some capital to invest when distressed selling is underway. You can be reasonably certain that Warren Buffet will have similar strategies.