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Holding cash is essentially an investment in the sovereign government that controls that currency. Simply sitting on cash does not imply little or no risk.
by apaprocki 11y ago
Holding cash is essentially an investment in the sovereign government that controls that currency. Simply sitting on cash does not imply little or no risk.
- vinceguidry 11y agoIt's not risk-less, but it's way less risky than every other alternative.
- apaprocki 11y agoPossibly only if you are operating in a single market. If you have currency/soverign risk because you are selling in 100 countries, it's way more complex. I bet Apple doesn't consider all the rubles they have from their operations in Russia as less risky than parking it in US treasuries. The problem is getting it there...
- vinceguidry 11y ago> I bet Apple doesn't consider all the rubles they have from their operations in Russia as less risky than parking it in US treasuries. They certainly have somebody looking at it. There's more than one component to risk. Sure, holding rubles in a Russian bank is risky, but that risk isn't really of losing your whole pile all at once. So you have time to leave your position if it gets more dangerous.
- rchaud 11y agoThey are not sitting on the cash. The article worded this very poorly. While all companies hold cash for managing day to day operations, a lot of the 2 trillion or whatever the number is, is parked in CDs, Treasuries, Bonds, etc. i.e., income-generating investments. Financial statements require companies to disclose "Cash and Cash Equivalents"; much of the hoarded money is in the form of investments that can be quickly converted to cash. It would be foolish to simply park non-essential funds in a savings account making 1%/yr.