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Abandon THESE pre-Fed hike tactics: Legg Mason CEO

Investors should be moving away from "more rates-orientated strategies" now that the Federal Reserve has increased short-term interest rates for the first time in more than nine years, Legg Mason Chairman and CEO Joe Sullivan said Thursday.

Sullivan told CNBC's "Squawk Box" he sees an opportunities in the bond market, after a "bear market for credit for the last year and a half."

For equities, it's going to be a stock picker's market, he added, pointing out that Wednesday's central bank move begins the process of ending the "rising tide of unprecedented Fed intervention."

Read MoreFed's done, now traders look for Santa rally

Despite the recent turmoil in the junk bond market, Sullivan said the Fed "just needed to go."

"If the Fed was to wait for the perfect time when all the markets were going to be perfectly aligned for a rate hike, it wasn't going to happen," he said. He added that policymakers could not wait again after deciding not to act at their September meeting because of global concerns sparked by an economic slowdown in China.

The Fed wouldn't have decided to increase rates Wednesday if the central bank had thought the move was going to be a one-and-done, he said. In fact, policymakers signaled the possibility of four more hikes next year should the economy stay strong enough.

Sullivan, whose Baltimore-based firm has nearly $700 billion in assets under management, said he's confident that any future Fed rate hikes will be gradual. "One of the things I look at back to is how the Fed handled the tapering. They were very thoughtful and measured in tapering their bond purchases. I think that's indicative of how they're going to proceed [on rates] going forward."

The final round of the Fed's quantitative easing ended in October 2014, after a monthly reduction of bond buying that played out over nearly a year. Through massive asset purchases, the central bank's balance sheet has swelled to $4.5 trillion.

Sullivan also made the case for "active management," which his investment firm's portfolio managers specialize in.

"Passive management is going to give you passive results, which will tend to be negative in a rising rate environment," he contended. "Passive management" often refers to buying funds tied to a certain index such as the S&P 500.

Raymond James Chief Investment Strategist Jeffrey Saut, who predicted earlier this week a "rip your face off-type rally" in stocks before year-end, disagreed with Sullivan that active management is the only answer.

"If this is what I think it is, a secular bull market that's got another six, seven, [or] eight years left, indexing with part of your portfolio is not such a bad idea," Saut told CNBC on Thursday. "I would add to that, however, you can add alpha by picking individual stocks."

For ideas, individual investors can look to what the best stock pickers are choosing, including billionaire buy-and-hold Ron Baron, Saut said.

Read MoreStocks ready for 'rip your face off' rally: Saut

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