In addition to the changed climate, Kostin also said that the valuations for strong balance sheets are tight. The group measured by a basket of shares trades 24 times ahead, only 14 times for weak balance sheets. That kind of appreciation was last seen during the technology bubble at the turn of the century.
Goldman does not recommend that investors live on low-lying companies altogether – Kostin said that they are still worth some allocation as a "tail risk" hedge while earnings growth fluctuates and companies continue to offer sustained growth ahead, albeit in a slower pace.
Leading companies in the weak balance basket include CBS, General Motors and Allergan.
"The outlook for the Fed policy, the pace of economic and wage growth and relative valuation are key drivers in our view of strong versus weak balance stocks," says Kostin. "Changes in these variables can lead us to reengage with strong balances or fluctuate to recommend weak balances instead. "
The rise of high-beta stocks and lower quality has been a blessing so far for stock pickers.
In January, a strong month for stocks, 49 percent of major corporate executives hit references, according to Bank of America Merrill Lynch, ahead of the 43 percent who peaked in the market in 201