Stock Market Indicator #3

Daniel Shainberg

September 28, 2018

Stock Market Indicator #3

Over the past few decades the S&P 500 has not seen a losing year when Cash as a % of Total Assets for Non-Financial Companies in the S&P 500 is >10%. This year we started at 19.7%.

Cash plus cash-equivalent short-term investments of the S&P 500 have been steadily increasing from 2007 to 2016. As a proportion of total assets, cash holdings increased by about 30% during this period. 

One of the reasons driving the increase in cash relative to assets is the proportion of technology oriented companies which typically have fewer traditional assets and more cash reserves. Nevertheless, while levered, corporate America still has liquidity.

Dan Shainberg

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