The Fed’s decision to hold rates steady through 2014 puts a slew of stocks in play.
That’s largely because the potential of ‘lower for longer’ is expected to push more money out of Treasurys and into stocks as investors seek better returns.
How should you position ahead of a rotation. The Fast Money traders have a few ideas.
Fast Money’s chairwoman thinks Microsoft looks all the more attractive after the Fed. Although the stock has spiked over the past few weeks, she thinks there’s more upside. “It pays a nice dividend and generates decent earnings growth,” she says. Both are criteria that could be attractive to conservative investors.
The Pit Boss thinks big pharma names such as Pfizer and Merck could now become all the more attractive. “These stocks generate dividend yields of about 4%,” he reminds. That’s way better than Treasurys.
Rather than play stocks, the Liquidator suggests playing a rotation out of Treasurys and into other types of bonds. “Corporate bonds should do well in a low rate environment,” he says. "You can play it with the LQD. Also he says, don’t forget about utilities.
Option investor Mike Khouw suggests long positions in Verizon, AT&T and tobacco names -- plays that worked last year. However, Khouw says there's a caveat. Those trades are only for investors who ‘believe’ the Fed can keep rates low through 2012. Khouw can’t get behind the thesis, himself. “I have a hard time believing 2 years we will have seen interest rates that stayed low for that long.”
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Trader disclosure: On Jan. 25, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova is long VRTS; Terranova is long IBM; Terranova is long SU; Terranova is long SJM; Terranova is long BRCM; Terranova is long MUB; Terranova is long EMC; Terranova is long F; Terranova is long SBUX; Terranova is long V; Terranova is long AXP; Terranova is long APC; Terranova is long OXY; Terranova is long TRLG; Terranova is long JNPR; Terranova is long CSCO; Terranova is long WFM; Terranova is long XOM; Terranova is long UNG April $5 puts; Finerman is long (JPM); Finerman is long (BAC); Finerman is long (PLCM); Finerman is long (IBM); Nathan is long AAPL Jan puts; Nathan is long BAC Jan puts; Nathan is long MS Jan puts; Nathan is long NFLX Jan calls; Nathan is long INTC Jan put spreads; Nathan is long MSFT puts; P. Najarian is long AAPL; P. Najarian is long BAC calls; P. Najarian is long C; P. Najarian is long JPM calls; P. Najarian is long MSFT; P. Najarian is long INTC; P. Najarian is long JCP
For Karen Finerman
Finerman's fund is long (AAPL)
Finerman's fund is long (JPM)
Finerman's fund is long (PLCM)
Finerman's fund is short (SPY)
Finerman's fund is short (MDY)
For Mike Khouw
CNBC.com with wires.