Goldman Sachs says stock picking is back and this is how to play it

President Donald Trump smiles during a news conference to announce Alexander Acosta as U.S. labor secretary nominee in the East Room of the White House in Washington, D.C.
Andrew Harrer | Bloomberg | Getty Images

The rise in macroeconomic uncertainty under President Donald Trump has created a unique opportunity for active investors to beat the market by finding stocks that trade to their own tune, according to a new report from Goldman Sachs.

The investment firm says that after years of inflows into passively managed funds, the current investment environment seems conducive for "skillful stock pickers" to generate above-average returns.

"We expect elevated economic policy uncertainty under the Trump administration will create 'winners' and 'losers' and stock performance increasingly will be driven by idiosyncratic factors, such as sensitivity to wage inflation, margin pressures, and uses of cash," Goldman's U.S. equity strategist, David Kostin, wrote in a note to clients Thursday.

The strategist says the surprise election of Trump and the sweeping policy changes that will likely come with it has become a catalyst for stocks to stop trading so in line with each other.