David Tepper, who made the most money of any hedge fund manager in 2013 at $3.5 billion, believes investors better approach the market with more caution now.

"I'm not saying go short, I'm just saying don't be too fricking long right now," the head of Appaloosa Management told a few thousand of his colleagues Wednesday at SkyBridge Capital's SALT 2014 conference in Las Vegas.

Among his concerns are a deflationary environment, weaker-than-expected U.S. growth and a European Central Bank (ECB) that badly needs to ease monetary policy. The result is a market that not that long ago was fairly easy to play but which is now getting trickier. (Tepper later told CNBC he has reduced his equity exposure to about 60 percent from 100 percent six months ago, but that he still sees value in stocks like Google and Priceline).

"Now I have a position (where) I'm long enough with exposure where I can bring it up or I can take it down," Tepper said. "I am nervous. I think it's nervous time." Read MoreWho's ruling the hedge world? You'll never guess He is especially concerned about the ECB, which targets inflation at a lower rate than the U.S. Federal Reserve, which is looking to keep inflation below 2.5 percent. Recent reports have indicated that the ECB is preparing a variety of measures for its June policy meeting, including rate cuts and some targeted measures aimed at boosting lending to small- and mid-sized firms. However, it's unlikely that the bank will approve quantitative easing measures along the lines of other central banks including the Fed, which has boosted its balance sheet past $4.3 trillion in its easing measures since the financial crisis.

David Tepper, founder of Appaloosa Management. Adam Jeffery | CNBC