Today, corporate stock buybacks are at a 30-year high. You might ask why. Well, Price/Earnings ratios are now approaching an 18-year low, so obviously, many executives believe that their stocks are great buys.

But the real compelling reason is that corporate America is trying to take advantage of the 15% federal taxation on dividends before the tax rate is increased as some presidential candidates favor. As a result, there's a rush for companies to buy back their stock and boost management's ownership so they can capture more dividends distributions and take full advantage of the lower rate. In fact, the more stock that a company owns, the more management tries to pay itself via dividends instead of salaries.

In 2007, the stock market lost approximately $1 trillion in stock float due to aggressive stock buybacks as well as mergers and acquisitions. This was the fourth year in a row that the amount of stock outstanding shrank. Ever since the dividend tax relief was enacted in mid-2003, the number of companies buying their stock back has soared.

Let's hope that the political rhetoric continues, since it's accelerating corporate buybacks and encouraging cash rich companies to boost their dividends.

Excluding the troubled financial sector, corporate America is in pretty good shape on a cash flow basis. If you divide money market assets by the value of the Wilshire 5000, the amount of cash in reserve is over 26%. The highest level that I've ever seen was almost 29% in early 2003. That was after the stock market suffered from severe stock mutual funds outflows for almost three years. In other words, there's plenty of cash ready to jump into the stock market when investors are ready.