Ever check your savings account and sigh at the tiny interest rate? Now imagine that, but with billions of dollars.
It’s a frustrating thought, right? But that’s exactly what some of the biggest companies you’ve invested in are doing—and it’s your money they’re just sitting on. This isn’t a new problem. After the 2008 crisis, giants like Apple, Google, and Microsoft started hoarding cash like doomsday preppers. And it left shareholders wondering, “What about us?”
Here’s the simple breakdown of why they do it and why it should matter to you.
Why Are They So Scared? The 2008 Ghost 👻
The main reason is fear. The 2008 financial crisis gave corporate leaders a collective trauma they never forgot.
Imagine every bank and lender suddenly slamming their doors shut. That’s what happened. When Lehman Brothers collapsed, the global economy had a financial heart attack. Credit markets froze. Even healthy, profitable companies couldn’t get a loan to make payroll.
CEOs who lived through that vowed, “Never again.”
Their solution? To build a massive fortress of cash. They want a giant emergency fund, or “dry powder,” so they never have to depend on a bank again. While that sounds prudent, it’s like stuffing billions under a mattress where it earns almost nothing.
The Tax Trap Abroad ✈️
Another big reason, especially back then, was a tax headache.
Many US companies, like Apple and Cisco, make a ton of money overseas. But bringing that cash back home to the U.S. meant facing a massive tax bill (around 35% at the time).
Think about it: If you earned $100 on a trip, but had to pay the government $35 just to bring it home, would you? Probably not. You’d likely leave it in an overseas bank account.
That’s what these companies did. Billions of dollars were effectively stuck in other countries, unable to be used for paying dividends or buying back shares in the US.
Your Money, Their Lazy Savings Account 🤔
So, why should you care? Because you are an owner of the business. That cash technically belongs to you.
When a company sits on a mountain of cash, it’s often a waste of potential. That money could be used for three better things:
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Investing in Growth: Fueling new projects, research, or smart acquisitions.
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Share Buybacks: Reducing the number of shares, which makes your remaining shares more valuable.
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Dividends: Paying you, the owner, directly in cash! 🤑
A company’s job is to make your money grow. If they can’t find a brilliant way to reinvest it, they should give it back to you so you can. Letting billions languish in a low-interest account hurts your returns and does little to help the broader economy.
What do you think? Should companies keep a giant safety net, or should they give the cash back to you, the owner? Let me know below! 👇
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