Presumably stock buybacks are rising, companies are focusing on capital expenditure for growth or maintenance instead of hording, covering leveraged positions, dividends being issued (possibly to retain shareholders vs competitors), or cost of goods/labor are increasing faster than they can cut fat (reduced profit compared to revenue). I’m sure there are other factors but you won’t find just one reason.
MeltingDown- on
Would be a great time to be a company with 0 meaningful debt and $4B in the bank rn
etzel1200 on
What actually was the 2019 dip?
redditmodsRrussians on
I dunno if this is tied to stonk buybacks. This graph starts to look sus when you layer interest rate levels over it because it doesnt seem to correlate. The periods from 08 all the way to 21 saw a pretty steady climb in cash levels that coincided with ZIRP along with the attempt at rate increases then back to ZIRP. The ZIRP pushed cash holdings up after that with a massive decline again as rates started to rocket up.
On the other hand, that climb out on cash holdings in 20-21 was likely due to covid and the massive spike in profits the companies were making through price increases. Also, all that cash holding fueled record buyback levels over the last 10 years. Basically, posting the graph by itself might just be more đđ» wishcasting.
ThinkingOfTheOldDays on
Damn. Good find Larry.Â
No-Comment1925 on
Should have looked for a net cash as a % of market cap / total assets instead
PleaseBLogicalNow on
This doesnt show the whole picture. Until 2020, goings were borrowing to do buybacks so percentage cash grew. When the earnings recession hits next quarter or the following companies are not only going to suddenly invert some are going to have to start raising in the equity market. So youre going to have an earnings miss, a dividend or share repurchase exit and then an immediate share offering. So what happened with INTC (which I warned this board before earnings) is going to play out over and over again.
triggermeharderdaddy on
One difference between now and all these data points pointing to a recession and market crash is the insane amount of money the government injected into the economy , there was 900 billion dollars injected to fight inflation . The building and infrastructure sectors are thriving reporting record earnings due to the money injected by the government of course. Weâre really in unprecedented times
ldmonko on
why does companies do stock buybacks when ATH ? It should be used to prevent bottom falling out, don’t understand using at ATH. don’t they have anything better to do with cash ?
delulubacha on
What is this graph? Cash pile of S&P500 companies? So next part of the cycle is lower demand, high but reducing debt costs with central banks cutting and relatively lower cash piles. The thing thatâs missing is the conversion of cash to another short term that asset that yields a little more then cash. Ie is this just cash or cash and cash equivalents.
Substantial_Diver_34 on
Whereâs the money Lebowski?
cold_dietcoke on
Companies are laying off people. Buyback happened like last year lol
prominorange on
Load up the put cannons with 4 mo+ exp when that yield curve uninverts bois
OddFellow1066 on
A batch of companies have announced stock buybacks. In theory, it is a way to reward shareholders by allowing them to sell their shares back to the company (at a good price for the shareholder) and allowing the shareholder to be taxed at capital gains rates, which are LOWER than dividend taxation rates. The SEC sets rules as to when corporations may buy shares relative to earnings announcements (“blackout periods”).
“Cash as % of total assets” indicates that fewer companies are likely to announce share buybacks.
What is missing with this graph is information related to average (or index) market performance.
A current list of companies that have announced share buybacks:
Note, many companies got caught with their cash levels too low back in 2008 and got their sensitive parts caught in a wringer when the S&L/housing credit crisis caused bank lending to dry up almost completely.
Might be some lessons to be learned from that time, not so long ago….
TrollLolLol1 on
If markets need more cash just make money printer go burrrrrrrrr. I donât get whatâs the issue.
18 Comments
What this mean
bear market is coming
Presumably stock buybacks are rising, companies are focusing on capital expenditure for growth or maintenance instead of hording, covering leveraged positions, dividends being issued (possibly to retain shareholders vs competitors), or cost of goods/labor are increasing faster than they can cut fat (reduced profit compared to revenue). I’m sure there are other factors but you won’t find just one reason.
Would be a great time to be a company with 0 meaningful debt and $4B in the bank rn
What actually was the 2019 dip?
I dunno if this is tied to stonk buybacks. This graph starts to look sus when you layer interest rate levels over it because it doesnt seem to correlate. The periods from 08 all the way to 21 saw a pretty steady climb in cash levels that coincided with ZIRP along with the attempt at rate increases then back to ZIRP. The ZIRP pushed cash holdings up after that with a massive decline again as rates started to rocket up.
On the other hand, that climb out on cash holdings in 20-21 was likely due to covid and the massive spike in profits the companies were making through price increases. Also, all that cash holding fueled record buyback levels over the last 10 years. Basically, posting the graph by itself might just be more đđ» wishcasting.
Damn. Good find Larry.Â
Should have looked for a net cash as a % of market cap / total assets instead
This doesnt show the whole picture. Until 2020, goings were borrowing to do buybacks so percentage cash grew. When the earnings recession hits next quarter or the following companies are not only going to suddenly invert some are going to have to start raising in the equity market. So youre going to have an earnings miss, a dividend or share repurchase exit and then an immediate share offering. So what happened with INTC (which I warned this board before earnings) is going to play out over and over again.
One difference between now and all these data points pointing to a recession and market crash is the insane amount of money the government injected into the economy , there was 900 billion dollars injected to fight inflation . The building and infrastructure sectors are thriving reporting record earnings due to the money injected by the government of course. Weâre really in unprecedented times
why does companies do stock buybacks when ATH ? It should be used to prevent bottom falling out, don’t understand using at ATH. don’t they have anything better to do with cash ?
What is this graph? Cash pile of S&P500 companies? So next part of the cycle is lower demand, high but reducing debt costs with central banks cutting and relatively lower cash piles. The thing thatâs missing is the conversion of cash to another short term that asset that yields a little more then cash. Ie is this just cash or cash and cash equivalents.
Whereâs the money Lebowski?
Companies are laying off people. Buyback happened like last year lol
Load up the put cannons with 4 mo+ exp when that yield curve uninverts bois
A batch of companies have announced stock buybacks. In theory, it is a way to reward shareholders by allowing them to sell their shares back to the company (at a good price for the shareholder) and allowing the shareholder to be taxed at capital gains rates, which are LOWER than dividend taxation rates. The SEC sets rules as to when corporations may buy shares relative to earnings announcements (“blackout periods”).
“Cash as % of total assets” indicates that fewer companies are likely to announce share buybacks.
What is missing with this graph is information related to average (or index) market performance.
A current list of companies that have announced share buybacks:
[https://www.rttnews.com/corpinfo/stockbuybacks.aspx](https://www.rttnews.com/corpinfo/stockbuybacks.aspx)
Note, many companies got caught with their cash levels too low back in 2008 and got their sensitive parts caught in a wringer when the S&L/housing credit crisis caused bank lending to dry up almost completely.
Might be some lessons to be learned from that time, not so long ago….
If markets need more cash just make money printer go burrrrrrrrr. I donât get whatâs the issue.
5% swing in cash? Who cares this means nothing.