- Four Debt-Free Companies to Own if the Markets Tank–and Even if They Don't
- The Best of the Best Dividend-Paying Stocks
- Muni-Bond Market Tumbles As Investors Demand Higher Yields on Shaky Finances
The problem is it's just not true. Companies that carry little or no debt are kicking butt and will continue to do so even if the markets stumble.
Not only are most of them tacking on solid numbers in very volatile markets, but over time these debt-free companies are proving themselves to be stable and reliable performers.
Take last year for example. The S&P 500 returned 2%. Yet, the top 15 firms as measured by the highest amount of cash and short-term investments as a percentage of total assets returned an average of 15% according to CNBC analyst Giovanny Moreano.
That's 650% more than their debt-laden brethren over the same time frame.
So far this year, my favorite debt-free companies have tacked on average gains of 19.82% versus the S&P 500, which was up 9% as of July 3. That's a 120% advantage over the same time period.
Going further back these same companies have done even better.
In fact, my favorite debt-free choices have returned an average of 349.16% versus a loss of -3% for the S&P 500 as a whole since the top of 2007 when the financial crisis broke.
Over the past decade that number jumps to over 2,061%. And, I'll bet you dimes to Bernanke dollars that these same debt-free companies will pull ahead further in the years to come.
Over the past few years there have been unprecedented swings in the major indexes, scaring some investors out of the markets altogether.
What people don't realize is that successful investing is a matter of continuous performance, not instantaneous performance.
The widely watched sale drew interest from around the country as debate continued over whether the stability of municipal finances has been a factor in market prices. The tax-exempt bond market has been overwhelmed by a deluge of supply that has decreased demand, depressed prices and forced yields higher.
"The tax-exempt municipal bond market is a cold, cold world right now for issuers and taxpayers," Tom Dresslar, a spokesman for the California State Treasurer told The Wall Street Journal. He added that the state decided to cancel another $267.3 million bond sale it planned to price this week "in light of market conditions."