Are Stock Buybacks Fueling a Hidden Market Bubble?

July 21, 2025 | Season 7 | Episode 28 The invisible forces of supply and demand are reshaping financial markets in ways that savvy investors need to understand. This deep dive explores how stock buybacks have overtaken dividends as the primary method companies return capital to shareholders—and why timing matters tremendously. When companies repurchase shares, they reduce market supply, potentially boosting earnings per share and stock prices. But there"s a crucial distinction between disciplined buyback strategies like Warren Buffett"s (buying only when shares represent exceptional value) and the problematic pattern many corporations follow: buying high when flush with cash, then halting repurchases when prices fall. This "buy high, sell low" approach raises serious questions about corporate stewardship of shareholder capital. The Treasury market faces its own supply-demand dynamics with approximately $36 trillion in debt structured across bills (one year or less), notes (1-10 years), and bonds (10+ years). With the average maturity around six years and interest rate at 3.3%, even significant Fed rate cuts would have less impact on government financing costs than sometimes claimed. Meanwhile, technology companies are benefiting from policy tailwinds, including immediate R&D expense deductions that particularly advantage the "Magnificent Seven" tech giants responsible for nearly half of all S&P 500 research spending. In the streaming wars, YouTube has quietly surpassed Netflix with 12.8% market share versus Netflix"s flat 8.3%. Despite Netflix"s $556 billion market cap, analysts suggest YouTube could be worth over $700 billion as a standalone company, bolstered by its creator-based content model that keeps costs comparatively low. For investors navigating today"s complex markets, understanding these fundamental forces provides crucial context for making intelligent decisions. Whether evaluating a company"s capital allocation strategy or assessing policy impacts on different sectors, recognizing how supply and demand drive valuations has never been more important. Want to sharpen your investment edge? Subscribe to our podcast for more market insights that go beyond the headlines and help you see what others miss. ** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice. For full disclosures, ADVs, and CRS Forms, please visit https://heroldlantern.com/disclosure ** To learn about becoming a Herold & Lantern Investments valued client, please visit https://heroldlantern.com/wealth-advisory-contact-form Follow and Like Us on Youtube, Facebook, Twitter, and LinkedIn | @HeroldLantern