It's actually a topic we don't discuss enough. Select companies are hoarding cash but I actually think it's a minority. Those that can hoard may be doing it for many different reasons. If the FANG stocks aggressively engage their cash they will draw the ire of regulators for squelching competition. JNJ cash is a target for thousands of lawsuits. Berkshire cash was an attempt to time the market and buy low. Something that worked for Buffett for decades but has cost shareholders when the crash is already 3 years late. He completely missed the bus in 2020 and left 50% gains from that money on the table. He may redeem himself next year if he can pick up some assets 30% off. Time will tell.
It's that recency bias thing again. Bottom line is cash is currently a drag on returns with 0% interest and booming GDP growth. If the FED were to raise rates to 2% the cash would matter, but the markets probably just corrected 30%+ so an investor isn't ahead in the short-term. I'll direct my concerns to companies with excessive debt that have no ability to pay it down in less than favorable market and economic conditions.
On a side note politicians are coming after some of this cash soon in the form of taxes. They'll probably get some if it to partially pay for stimulus. Stimulus caused the recent cash bounty so I guess it balances out in the end.
It's that recency bias thing again. Bottom line is cash is currently a drag on returns with 0% interest and booming GDP growth. If the FED were to raise rates to 2% the cash would matter, but the markets probably just corrected 30%+ so an investor isn't ahead in the short-term. I'll direct my concerns to companies with excessive debt that have no ability to pay it down in less than favorable market and economic conditions.
On a side note politicians are coming after some of this cash soon in the form of taxes. They'll probably get some if it to partially pay for stimulus. Stimulus caused the recent cash bounty so I guess it balances out in the end.