As market sells off, these are the strategies Goldman gives clients to play defense

Published Thu, Jul 8 20219:53 AM EDTUpdated Thu, Jul 8 202110:23 AM EDT

U.S. stocks tumbled on Thursday , and Goldman Sachs has two plunge-proof portfolios that should held investors navigate the volatility. The first is a basket of high-quality names, while the second focuses on defensive plays that can outperform regardless of global growth prospects. The high-quality stock basket is a sector-neutral portfolio of large-cap stocks that's equal weighted. The firm screens for companies that have strong balance sheets, stable earnings and revenue and above-average return on equity. The included names also have low historical drawdown risk. "In weak or uncertain macroeconomic environments investors should place a premium on the stability and safety of these companies," the firm said in a note to clients. Within the communication services sector Alphabet and T-Mobile are among the names that make the list. Home Depot , Dollar General and Dollar Tree are included within Discretionary, while Church & Dwight and McCormick are picks from Staples. Goldman selected Thermo Fisher and Regeneron in Health Care, while First Republic and Truist are solid bets in the Financials sector. Part of Thursday's premarket sell-off stems from fears around the global economic comeback as cases of the delta Covid variant surge. Goldman also has a basket of stocks that are attractive bets for investors even if growth does slow. The firm's defensive stock basket includes companies across eight S & P 500 sectors with a lower beta than the S & P 500 to Goldman's U.S. MAP index. The proprietary index assembles key indicators for each country, looking at factors including GDP growth and purchasing managers' indices. It seeks to "summarize the importance and strength (relative to consensus expectations) of economic indicators worldwide." The firm's defensive basket has a weighted-average beta of 0.1 to the U.S. MAP index, while the S & P 500's beta to the index is 0.5. Essentially, this means the stocks are less dependent on the overall economy for growth. Unlike the high-quality portfolio, the defensive list is market-cap weighted. Apple , Microsoft , Amazon , Johnson & Johnson and Visa round out the top five holdings. Also in the top 20 holdings, which comprise about 50% of the total basket, are UnitedHealth , Procter & Gamble , Cisco Systems , Salesforce , Coca-Cola and Merck . — CNBC's Michael Bloom contributed reporting.

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U.S. stocks tumbled on Thursday, and Goldman Sachs has two plunge-proof portfolios that should held investors navigate the volatility.