Companies have been piling on cash in their balance sheets.

The crisis that began in 2008 seems to have taught the corporate world an important lesson. It is necessary to hold cash. This could be one of the reasons why companies have been piling on cash in their balance sheets. This appears to be a worldwide phenomenon as per the Economist. One reason for keeping cash on the books could be the lack of an investment opportunity. Another could be that the companies wish to remain prepared given the economic uncertainty haunting the globe. After all US is on the verge of a fiscal cliff. Euro zone's crisis does not appear to be easing off. At the same time the dragon nation China is showing signs of a recession. The Middle East political scenario is heated up as well. During such times of uncertainty cash is always king. At lea st the corporate world appears to think so. However, when interest rates are abysmally low in most parts of the world a question that pops into mind is whether this cash is earning healthy returns? The obvious answer to this is of course not. Cash is most productive when applied in attractive investments. But when things are as volatile as what we see in the current scenario the attractiveness of an investment opportunity is dicey. At such times it is better to be safe than to be sorry.