Is Apple More Powerful than the Government?

Posted in: Economics, Stock Market, Thought of the Week

As of last week, Apple had no debt and held the largest cash balance in the world. In the past couple of months, Apple’s management had come under scrutiny from shareholders because their large cash balance. A large cash balance destroys shareholder value because cash earns next to no return in a bank account due to the low interest rate environment. Apple decided to make these frustrated shareholders happy by increasing their dividend and expanding their share buyback program.

Since this announcement occurred on April 30th, even ultra-conservative funds that typically only invest in Treasuries were desperate for a piece of Apple. The point is that many investors view Apple as a low risk alternative to traditional investments like Treasuries, and our investment committee feels that this demand will inspire other large companies to follow their lead. Read this week’s Thought of the Week to find out which companies our investment committee believes may be making a big announcement sometime soon.

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As an Investment Advisory Representative working in conjunction with Global Financial Private Capital (GFPC) we are provided weekly thoughts on what is happening in the economy and the market.  Written by our investment committee at GFPC we find these thoughts to be informative and interesting.