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Can People or Corporations Have Too Much Cash?
Published : February 15th, 2013
325 words - Reading time : 0 - 1 minutes
( 1 vote, 5/5 ) Print article
 
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Keywords :   Hedge |

Is it possible to have too much cash for your own good?

I believe the average 7th grader would easily recognize the inherent absurdity of such a question. However, the average economic writer does not understand what the average 7th grader does.

For example, please consider
Apple isn't only company with too much cash on CNN Money by author Paul La Monica.

Issuing preferred shares that pay a big dividend may not be the best use of Apple's more than $137 billion of cash and liquid investments. But hedge fund manager and Apple shareholder David Einhorn, who is pushing the maker of iEverything to reward investors with a new class of high-yielding stock, has a point.

Apple should be doing something more productive with its more than $137 billion in cash. Did I mention that Apple (AAPL) has more than $137 billion in cash?

And it's not alone. Several leaders in the tech and pharmaceutical industries are hoarding cash. ....

 

Mercy Me

Mercy! Corporations have too much cash! And they are hoarding it!

My Goodness. It's no wonder their stocks are doing poorly. Why everyone knows making money is bad business and spending money isn't.

Yes readers, this is the way economic writers on mainstream media think.

Although I am not opposed to higher dividend yields, I am also not opposed to the concept of waiting for better opportunities.

Recall that
Microsoft bid $44.6 billion for Yahoo in 2008. Microsoft's offer was over $30 a share. The current price, after a huge rally is $21.

But No! Heaven forbid corporations "hoard cash". La Monica wants corporations to do something with their cash now.

The fact is the S&P just had a rally over 100%. Stocks are likely to correct (and hard). Buying companies at lofty prices is a fool's game, and I commend Apple for not doing it.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Mish

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
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