After buying large when the stock market tanked, Warren Buffett now thinks its time to pull back on buying stocks. He's cleaning out some dead wood and replacing it with corporate and government debt rather than new stock purchases. Even though the economy is on the mend, Buffett is concerned that it is still weak.

That's a very different tune than he was singing last year when he invested billions in Goldman Sachs (GS), General Electric (GE), American Express (AXP), Bank of America (BAC), Wells Fargo (WFC) and U.S. Bancorp (USB). Many of his picks got bailouts from the government, and Buffett benefited from the help, along with all private investors who did the same. If his picks pan out, his payoff could be tremendous.

Buffett did make some big mistakes and personally lost $25 billion during the financial panic of 2008, so he has a lot to make up. In fact the financial crisis cost him his title of the world's richest man. Bill Gates now holds that crown, according to Forbes. Buffett has called the global financial meltdown the financial equivalent of Pearl Harbor. Buffett told the The New York Times that the problems aren't over and the economy is not "functioning as it should be."

Even with his mistakes Buffett still commands the public's attention. That's because those who invested $1,000 in his company, Berkshire Hathaway (BERK), in 1965 would have millions of dollars by 2007.

Buffet is not changing his value investing style. He's still a big believer in value investing, which includes buying stocks at bargain basement prices. People who closely watch him wonder what his final steps will be. He's now 79 and, for most investors, it's wise to move most of one's assets to cash and bonds.

Many wonder what is going to happen to Berkshire Hathaway post-Buffett and he still hasn't publicly announced a successor, even though there has been private speculation that he's got some people in mind. Reports indicate that Buffett is grooming several possible successors, including David Sokol, chairman of MidAmerican Energy Holdings at Berkshire and also chairman of NetJets, the private jet company owned by Berkshire.

But for now Buffett is selling more stocks than buying according to second quarter corporate reports. Bloomberg reports that he's spending less on stocks than he did in more than five years, but he's still buying shares in some companies, though a majority of his spending is on buying corporate and government debt.

Even though Buffett missed predicting the financial meltdown, just like many of us, he's still watched by millions, who listen to his every word on investing strategies and watch his buy and sell decisions. He's the first to admit his timing was bad when it came to financial stocks just before the meltdown. But he's still one voice worth listening to for investing advice. Just be sure to make decisions for your own portfolio that will let you sleep at night.

Lita Epstein has written more than 25 books, including The Complete Idiot's Guide to Value Investing.

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