> I keep reading about corporations sitting on record amounts of cash.
> What happens with that money? Will they do stuff with it this trader
> is suggesting?
>
> I guess my question is what does it mean to "sit on cash"?
It means the same thing as for a household. You have a bunch of money, and instead of spending or investing it you keep it in a bank account. For big corporations, usually it's not literally a bank account - probably a money market account, a CD, or repos - but it all amounts to the same thing. They will almost certainly not do any fancy trading strategies like what the trader suggests - that kind of stuff is done by hedge funds, but it's too risky for non-financial corporations. (Except maybe just buying Treasury bonds, which is one of the things he suggests doing - but a corp wouldn't be doing that as a play for capital gains, just as a safe store of value.) What happens to the cash? It's recycled through the financial system, in different ways depending on the specific instrument (money market account vs. CD vs. repos). It ends up financing low-risk, short-term stuff (as opposed to the inherently high-risk, long-term nature of "real" investment): generally lending money short-term to banks, governments, and other corporations. But keep in mind - when you hear that corps are sitting on record amounts of cash, that's true, but quantitatively it's not a large amount of cash. Corps as a general rule aren't *supposed* to hold cash - from the shareholders' POV, it's annoying to know that the company you own has lots of cash in the bank. You're "paying" the CEO to make profits in his industry, not to hold low-yielding cash in a bank account - you could do that yourself, thanks very much. Households probably hold about 5x as much cash as corporations currently do, the "record amounts" notwithstanding.
SA