Q: Since Google (NSDQ: GOOG) appeared in the August issue, the stock is up just 4.7 percent. The market has been very volatile, and I keep hearing negative news about the technology sector. Should I wait around or sell?  –Holly Scott

A: The technology sector has been beaten down in the recent months as the weak economy continues to weigh on consumers and businesses. People are back to penny-pinching, and companies are holding off on their technology needs. But tech spending will rebound once confidence returns; corporations will need to increase technology spending to supplement their growth and the efficiency of their operations.

Google’s (NSDQ: GOOG) stock price doesn’t reflect the quality of its business and immense growth potential.

Although earnings growth has slowed, performance remains strong. The firm continues to grow revenue across its core businesses.

As Keith Goddard points out in Across the Street, many investors overlook the success of Google’s Android-based phones. They’re rapidly winning share in a market that has attractive growth prospects.

The firm maintains a healthy balance sheet and continues to make acquisitions and strengthen its presence in emerging markets. The search giant has close 18 deals so far in 2010. Most recently, Google purchased Angstro to boost its social-network offerings and  Like.com to improve its visual-search tools.

Google has a strong management team that continues to position the company for future growth. Continue to hold the stock or add to accumulate shares.

Q: How can individual investors profit from the uptick in mergers and acquisitions without investing too much time and research? — Edward Ricart

A: With 3M’s (NYSE: MMM) acquisition of Cogent (NasdaqGS: COGT), Sanofi-Aventis’ (NYSE: SNY) purchase of Genzyme Corp (NasdaqGS: GENZ) and the plethora of other other deals, you almost have to wonder why equities have performed so poorly when corporations continue to find value in the market.

The recent spate of mergers and acquisitions (M&A) stems from two things: the huge piles of cash on corporate balance sheets and the huge exodus of cash from equity mutual funds.

Despite their dismal performance of late, equity funds contribute substantial liquidity and balance to the markets, swooping in to buy shares of underpriced companies or shorting stocks whose valuations have become too rich. This balance helps slow M&A activity, keeping  share prices in line with fair value–most corporate buyers like to get a bargain. But like any investor, corporate acquirers sometimes make dumb buys just because money’s burning a hole in their pocket.

Regardless of whether a deal is ill-advised or a brilliant maneuver for the acquirer, hedge funds and other sophisticated investors can make out like bandits by arbitraging those deals. In the wake of announced buyouts, the share price of the acquiring company has a tendency to fall–particularly if it’s perceived to be overpaying–while the target’s stock price will increase to whatever premium is paid.

A basic merger-arbitrage strategy involves shorting the acquirer and going long the target.

Launched last November, IQ Merger Arbitrage (NYSE: MNA) brings this strategy to the masses and has succeeded thus far. Sticking primarily to the long side of the equity equation, the exchange-traded fund (ETF) takes positions in companies for which a takeover announcement has been made public. It also takes short positions on global equity indexes through the futures market as a hedge, though so far it hasn’t shorted any specific companies.

Although less than a year’s worth of data is available, the fund’s performance has been impressive. Since its inception, the ETF has returned 3.73 percent, while the MSCI World Index has lost 0.41 percent. This year the fund is up 0.83 percent, compared to the S&P 500’s 5.9 percent decline.

The fund’s low beta means that its returns aren’t particularly correlated to any asset class; IQ Merger Arbitrage is an excellent way to profit from the recent spate of M&A activity and cushion your portfolio against broader market moves.

Q: Why don’t I hear much about Chevron’s NYSE: CVX) activities in shale-gas plays? – M. Gaddis

A: Chevron holds acreage in Colorado’s Piceance Basin and the Haynesville Shale in east Texas. The company also added about 200,000 acres to its leasehold in western Canada, though the energy giant has yet to reveal the exact location.

Why hasn’t Chevron made a bigger splash in North American shale gas?

During last year’s third-quarter conference call Vice Chairman George Kirkland indicated that an oversupply of natural gas had prompted management to curtail its drilling activity in the Lower 48 states.

Kirkland elaborated on this decision during a recent conference call to discuss Chevron’s second-quarter results:  “We like unconventional gas where we can make reasonable returns…[Our US holdings] don’t presently make development sense because the gas price and the market conditions with oversupply in the US just doesn’t make it attractive.”     

That being said, the company continues to invest in Polish and Romanian shale plays that are still in the nascent stages of development. Management expects this investment to pay off over the long term as Western Europe seeks alternatives to Russian gas.