Pros Reveal Top Trades Following Fed Action

Thursday, 13 Sep 2012 | 6:55 PM ET

The U.S. Federal Reserve launched another aggressive stimulus program Thursday, saying it will buy $40 billion of mortgage debt each month and continue to purchase assets to improve the jobs market.

In the wake of the Fed's announcement, the "Fast Money" traders revealed how they plan to position themselves.

The Federal Reserve headquarters in Washington, DC.
The Federal Reserve headquarters in Washington, DC.

(Related: Read The Federal Reserve Statement Here.)

Trader Brian Kelly called gold the "easiest" way to play QE3. To gain exposure to gold, Kelly suggests the SPDR Gold Sharesexchange-traded fund. Kelly also likes copper, though, and flagged metals miner Freeport-McMoRan Copper & Gold.

“Any of the metals work,” said Kelly, founder of Shelter Harbor Capital. “But gold is my favorite.”

Pros: Best Ways to Play Big Ben
Find out how the "Fast Money" traders are positioning themselves after Fed Chairman Ben Bernanke announced more stimulus.

(Vote Now: Did the Fed Get It Right?)

Tim Seymour, a hedge fund manager and founder of EmergingMoney.com, thinks the emerging markets is the best way to trade the Fed moves.

Seymour noted emerging markets are buying commodities, so investors should look at iron ore and coal. After all, Seymour said commodities had long been "overdone to the downside," meaning commodities prices were lower than he thinks they should be. He thinks commodities could continue to push higher. From the options pit, trader Mike Khouw said he saw a lot of upside bets in both the commodities and financials.

Finally, trader Keith McCullough noted that the Fed's bond buying program could create inflation. So he thinks investors should consider how inflation might impact companies.

"Inflation is going to slow growth, so you buy bonds and you short pro-cyclical stocks," said McCullough, chief executive of Hedgeye Risk Management, listing Caterpillar and FedEx as examples of stocks to short.

Read on for the Top Secrets of Pro Traders
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CNBC.com with wires.

When this story was published, Drew Sandholm owned the GLD.


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