It's over -- according the world's most successful investor. Yesterday, Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) CEO Warren Buffett effectively called the end of the U.S. recession, saying the economy has "sort of plateaued at the bottom." Only the day before, Fed chairman Ben Bernanke said the recession "was very likely over." How should investors position themselves?

On Tuesday, Buffett said that Berkshire is buying stocks "because I am getting a lot for my money." That sounds encouraging enough, but does it mean that stocks are, in aggregate, undervalued? Unfortunately not.

Buying ... selectively
Buffett isn't an index investor -- he purchases individual securities that he believes are undervalued. Meanwhile, with the S&P 500 rallying 58% from the March 9 market low, the stock market has lived up to its reputation as a leading indicator of the economy and then some, with current valuations suggestive of a robust recovery.

Indeed, the S&P 500 index is currently priced at 19.1 times its cyclically adjusted earnings (average inflation-adjusted earnings over the prior 10 years) -- the long-term historical average is 16.3.

The ol' animal spirits are back
Rising stock prices fuel confidence -- the resurrection of the M&A market is another by-product of that process. On Tuesday, for example, software firm Adobe (NASDAQ:ADBE) announced that it is acquiring Omniture (NASDAQ:OMTR) for $1.8 billion.

Buffett himself highlighted an example of the "animal spirits" returning to the market. Calling Kraft's (NYSE:KFT) bid price for Cadbury (NYSE:CSG) "a full price," he added "I've got a lot of confidence in (CEO) Irene Rosenfeld, but they have to do a lot of things right to justify this price." Berkshire Hathaway is Kraft's largest shareholder.

If you want to own equities, focus on individual stocks
The recession may well be over, but that is no reason to buy stocks indiscriminately -- in toto, the market isn't cheap. If you wish to ratchet up your exposure to equities, the best course of action is to focus on individual stocks that meet Buffett's standard -- i.e., make sure you're "getting a lot for your money."

Morgan Housel has identified high-quality businesses that are still cheap. Berkshire Hathaway is one of them; find out what the two other names are.

Take a hint from Warren Buffett's recent investments in fat-yielding Goldman Sachs and General Electric preferred shares: in this environment, dividends will be a critical component of future returns. The team at Motley Fool Income Investor can show you how to build -- and manage -- a portfolio of stocks that pay a growing dividend. To find out their top five recommendations for new money now, take advantage of a 30-day free trial today.

Alex Dumortier, CFA, has no beneficial interest in any of the companies mentioned in this article. Berkshire Hathaway and Omniture are Motley Fool Stock Advisor picks. Berkshire Hathaway is a Motley Fool Inside Value selection. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days. Motley Fool has a disclosure policy.