Breakout

Wall Street Trader Reveals His Q4 Playbook

Breakout

A recent analysis of how well fund managers are doing this year versus the S&P 500 simply referred to it as "the same old story," implying what everyone presumably already knows; that passive index funds beat the overwhelming majority of actively managed equity funds year in and year out.

While this is clearly bad news for the high-paid professionals who are lagging and fighting to keep their jobs, Joe Fahmy of Zor Capital says their plight can be your gain if you work it right.

"A lot of active managers are facing pressure to perform and they're going to chase (the market) with individual stocks," Fahmy says in the attached video.

This so-called ''career risk," he says, leaves the big mega-cap fund managers with no choice but to plow money into liquid, large cap names in hopes of driving them higher and salvaging their year.

He also thinks the year's top momentum stocks will be beneficiaries of this chase as well, and says such triple-digit gainers like Tesla (TSLA), Netflix (NFLX), Facebook (FB), Yelp (YELP) and LinkedIn (LNKD) are not over valued.

"These are explosive growth companies and you can't use traditional valuation metrics to value these companies."

Those points alone could drive the market to new highs, as he expects it will, but there are other positives in his fourth quarter game plan that he thinks will also boost the market. Seasonality is one. His early (and so far correct) prediction is that there will be no tapering of the Fed's asset purchase plan until Bernanke is gone in late January.

"Who cares if you agree with the Fed or not, it's a good environment to be in equities," he says, "so I say, don't argue with it, take advantage of it."

Fahmy says only two things could screw it up, a geopolitical event or the United States Congress. The leaders on Capitol Hill have always come through with a compromise at the last minute but that doesn't mean traders should be complacent about it. Still, Fahmy believes Washington will either arrive at some sort of an agreement or kick the can down the road like the always do.

View Comments (19)

Recommended for You