March 23, 2015
A&E has an original series called Hoarders that chronicles the lives of individuals whose homes are trashed because they collect too many things and are unwilling to part with anything. In corporations, there is a different type of hoarding going on, they are hoarding cash. The pile of cash in corporate vaults in the fourth quarter hit a record-high of $1.4 trillion.
Since America reemerged from our most recent recession, corporations have been much more cautious with their finances. The good news is that large corporations have significantly healthier balance sheets but the drawback is that corporations aren't spending money to replace their equipment or hire new employees.
Corporations aren't the only entities that have improved balance sheets; state and local budgets are in better shape, as well. It's no secret that our country's roads and bridges need a face lift. If state and local governments increased their spending it would provide a boost to local economies. In addition to improved infrastructure, corporations are going to have to spend money to either replace aging equipment or return value back to their shareholders in the form of increased dividends--this would provide a boost to our national economy.
Although the major stock indices continue to hit new highs, corporations and governments are in much different financial shape than they were before the financial crisis.
Ethan Wade, Financial Advisor
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).