Boat loads of cash: The chart below shows U.S. corporate borrowing as a percentage of GDP and cash balance as a percentage of income. Corporate borrowing is at historic lows and cash is at historic highs. Given the stark difference to the frantic reminders of the overleveraged government, banking system and the consumer, one would think we are on two different planets.

The overleveraged story is constantly in the news and due to the fact that bad news makes good copy, the cash rich group is hardly ever mentioned.  The last time corporate borrowing was this low Paula Abdul had a hit in the top ten and the time before that Nat King Cole had a top hit.

Although the government has managed its budget like an out of control shopaholic, U.S. Corporations have done a stellar job of managing their finances with near historic discipline.  American corporations are as flush with cash and as flexible as they have been in nearly 60 years.  One could be a bear on U.S. corporate stocks if that is what you are determined to do but to bet the farm against equities, one would have to conclude that the cash available will not find any better opportunities than the current return on cash (which is below 1%).    One would have to conclude that the same smart managers who accomplished this disciplined amazing horde of cash can’t find anything smart to do with it.

However, if you do believe they are smart enough to find opportunities with this much cash they can do pretty much anything they want.  They can acquire opportunities for cash, buy back their own stock, or raise dividends; they are already practicing the latter two.  To bet against this opportunity seems like a long shot to this Advisor.

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Rebecca Kennell is a Registered Representative and Investment Adviser Representative with/and offers Securities and Advisory Services through Commonwealth Financial Network ®,

Member FINRA, SIPC, a Registered Investment Adviser.  Custom Financial Design is located at 4647 North 32^nd Street, Suite B210, Phoenix AZ 85018 (602) 952-5588

Contributed by Mario Romero, CRS, CDPE, CLHMS
602-252-4191 office, 602-254-9810 fax
The Romero Team - Melcher Agency
www.TheRomeroTeam.com
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