In addition to the changing climate, Kostin is stretched. 14 times for weak balance sheet companies.
Goldman is not recommending that investors bail on low-leverage companies completely – Kostin said they are still worth some allocation as a "tail risk" hedge
CBS, General Motors and Allergan.
"The outlook for Fed policy,
Leading companies in the weak balance sheet basket." The rate of economic growth and relative valuation are the key drivers of our view on strong versus weak balance sheet stocks, "Kostin said.
The emergence of high-beta stocks and lower quality has been a boon so far for stock pickers.
In January, a month for stocks, 49 percent of large-cap managers beat their benchmarks, according to Bank of America Merrill Lynch. That's ahead of the 43 percent that topped the market in 201