Cash is returning to the real economy suggesting profit growth lies ahead.

U.S. investors are coming out of their foxholes.  We can say this because we can measure their willingness to hold less capital in the form of cash and more in the form of productive assets.  The change in the balances of cash held in banks and money market funds (M2 for the money and banking wonks out there) is inversely directionally consistent with the change in corporate profits.  As profits go up, economic activity picks up, companies and individuals become more confident and they hold less cash reserves.  Not surprisingly, as profits go up so do stock prices – imagine that!  We are now seeing this process begin to unfold.  Jeb B. Terry, Sr. July 5, 2013

M@ change v profits and stock prices 7-2013

Aberdeen Investment Management – a guide service for micro-cap technology investment

 

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