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Google Inc (GOOGL) and Apple Inc. (AAPL) Among Goldman Sachs’ Top Quality Tech Stocks

The Fed is scheduled to deliver its much anticipated verdict on a possible rate hike this week. While the outcome is uncertain, with many economists arguing that inflation and employment figures are still not strong enough to raise interest rates, others argue that if the rate hike was delayed further it could lead to a steeper rise in the future. So how are retail investors supposed to react to this scenario? Goldman Sachs created a list of 50 stocks that investors can rely on in the event the Fed ends up juicing the interest rate. These companies have strong balance sheets, which means that they are less vulnerable to a rise in borrowing costs, low volatility, and stable sales and earnings growth. According to the bank, such stocks outpaced companies with weak balance sheets by an average of five percentage points following the rate rises in 1994, 1999, and 2004. The top ten companies on Goldman’s list belonged to either the consumer discretionary or technology sector, and keeping in mind the impressive 12.57% year-to-date returns of the technology sector, we decided to dig a little deeper into these stock picks, which included Google Inc (NASDAQ:GOOGL), Apple Inc. (NASDAQ:AAPL), Cognizant Technology Solutions Corp (NASDAQ:CTSH), Oracle Corporation (NYSE:ORCL), and Mastercard Inc (NYSE:MA).

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Why do we pay attention to hedge fund sentiment? Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research have shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things...


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