Maybe he didn't know. Just because he is seemingly the best investor of all time doesn't mean he is a psychic and could predict the future. Buffett also got in GS preferred at like 105 (I think, maybe 115) and GE at 24. GS was against him for a long time. Lastly, he is the king of buy-and-hold so holding for years is normal.
Buffett is not in GS preferred 115. He wrote them a check for $5B at 10% with warrants attached that give him the right but not the obligation to buy GS's stock at a strike of 115 over the next 5 years. The deal is this....Buffett gets 10% unless GS defaults and has the option to buy the stock at 115. If the stock is selling at 200, for example, he will probably exercise the warrants. The deal is the same with GE. It's a sweet ass deal if you ask me.
Buffett doesn't time markets at all. He buys solid companies cheap, collects dividends and sells covered calls because he owns so much of the companies he gets the inside scoop on where the stock is going...
He DID know. In his 2002 2003 shareholder letter he clearly stated that despite falling 50%, stocks we still overvalued, thus there were very very few real investment opportunities. If he knew stocks weren't cheap yet, why he kept on buying?
Buffet's MO is to buy at a 20% discount to GNP. If you were to backtest this, you'd see the strategy works quite well, and it doesn't really matter which stocks he buys as long as they're profitable, have a moat, and are well known in their respective markets. All of this is access available to everyone, Buffet has just had more time to let the market prove his bets out. He drawsdown 40-50% at times just like most average investors. What separates him is time and more thorough examination of the annual reports. He also generally invests between 2-20% of his holdings, which is in stark contrast to mutual funds where 2.5% of holdings would be considered quite large