The Tide of Shares

Liquidity, the money supply, and what a shift from buybacks to new issuance could mean for markets

June 19, 2026

Most market commentary fixes on two things: earnings and the Federal Reserve. What companies make, and what the central bank does with interest rates. Those matter enormously. But there is a third force, quieter and rarely discussed, that has been one of the best things this long bull market had going for it — and it has almost nothing to do with either earnings or the Fed. It is the supply of shares itself.

For roughly fifteen years, American corporations have been the single largest net buyer of their own stock. They have spent trillions of dollars retiring shares faster than they issued new ones, steadily shrinking the number of shares the rest of us are bidding for. That is a structural source of demand, and it has quietly put a floor under prices the whole way up. The question I want to explore in this memo is what happens if that reverses — if we move from a world dominated by buybacks into one dominated by new stock issuance and initial public offerings.

To think about that clearly, it helps to separate two ideas that often get blurred together: the supply of money and the supply of stock. We pay enormous attention to the first — how much cash the Fed is pumping into the system — and almost none to the second. Yet price is set where money meets the available supply of shares. When that supply of shares swells, history has not been especially kind to investors. So in what follows I will trace how buybacks became the market's largest buyer, draw the line between money and the supply of stock, explain why the early signs of a shift deserve attention, and put today beside three earlier moments when the supply of new stock surged: the late 1920s, the late 1960s, and the dot-com era.

Start with the scale of it. In 2024, companies in the S&P 500 spent a record 942.5 billion dollars buying back their own shares, an 18.5% increase over the prior year and an all-time high.¹ They did not slow down. In the first quarter of 2025 alone, buybacks set a fresh quarterly record of 293.5 billion dollars — up 20.6% from the prior quarter and 23.9% from a year earlier.² By the estimates of one major research firm, S&P 500 companies were on pace to spend roughly one trillion dollars repurchasing stock across all of 2025, which would top the record they had just set the year before.³ Figure 1 shows the recent quarterly march higher.

This is not a new phenomenon, only a larger one. By one widely cited estimate, U.S. corporations spent nearly 10 trillion dollars buying back their shares between 2000 and 2017, as repurchases climbed from under 5% of corporate operating income before 2000 to more than 20% in the years after.⁴ The Federal Reserve's own research confirms the bigger picture: across the decades since the mid-1990s, nonfinancial corporations have been consistent net absorbers of equity, retiring more stock than they issued year after year.⁵ In plain terms, the corporate sector has not been raising money from the stock market. It has been handing money back and taking shares off the table.

It is worth remembering that this was not always allowed, or at least not safely. Open-market buybacks were uncommon before 1982, when the SEC adopted Rule 10b-18 and gave companies a legal "safe harbor" to repurchase their own stock without fear of being charged with market manipulation.⁶ That single rule change opened the door to the era we have lived in ever since. And the era had a powerful tailwind behind it: cheap money. Research from the Bank for International Settlements has shown that the great buyback booms were financed in no small part by companies issuing bonds at low interest rates and using the proceeds to retire equity — a trade that makes sense precisely when borrowing is cheap and the expected return on stock is high.⁷ The buyback machine, in other words, was largely a creature of the zero-rate, quantitative-easing world. That detail will matter when we ask whether the machine keeps running.

The mechanics of why this supports prices are straightforward. Every dollar spent on a buyback removes shares from circulation. Fewer shares, with the same or a growing pool of money chasing them, tends to push prices up — and as a bonus, it lifts earnings per share even when total profits are flat, because the same earnings are now divided across fewer slices. For fifteen years, the largest, most price-insensitive buyer in the market has been the companies themselves. That is the bid that has quietly been underneath this market.

Figure 1: S&P 500 quarterly share buybacks, marching to a record. Source: S&P Dow Jones Indices.

Here is where the distinction I mentioned earlier becomes important. When people talk about "liquidity," they often mean the supply of money — and by that measure, there is a great deal of it. The broad money supply, what economists call M2, stood at about 22.8 trillion dollars as of April 2026, having grown roughly 4.7% over the prior year.⁸ That is a record level, and it is worth noting how unusual the recent path has been: M2 actually contracted across 2022 and 2023, a genuine rarity, before resuming its climb.⁹ So on the money side of the ledger, the tide has come back in.

But money is only half of the equation. The other half is the supply of shares that money has to buy. Think of the market like an auction house. If the house holds a fixed number of paintings and the room keeps filling with bidders carrying more and more cash, prices rise — not because the paintings got better, but because more money is chasing the same canvases. Now imagine the auction house quietly removes paintings from the wall each week. Prices rise even faster. That is what buybacks have done. They have been pulling paintings off the wall while the Fed kept filling the room with cash. The combination of growing money and shrinking share supply is about as favorable a backdrop as equity investors can ask for.

The risk, then, is not only what the Fed does with the money supply. It is what corporations do with the supply of stock. Figure 2 puts the pieces side by side, in rough annual terms: the money supply grew by a little over a trillion dollars in the most recent year, corporate buybacks absorbed close to a trillion dollars of stock, and new company IPOs added only about 70 billion dollars of fresh supply. As long as that last number stays small and the buyback bid stays large, the supply of shares keeps shrinking and the auction-house dynamic keeps working in investors' favor. The whole arrangement depends on companies continuing to be net buyers. The question is what happens if they stop — or worse, if the auction house starts wheeling in new paintings faster than it removes the old ones.

Figure 2: An illustrative comparison of approximate annual dollar flows — money created, stock bought back, and new stock issued. Sources: Federal Reserve H.6; S&P Dow Jones Indices / Morningstar; Nasdaq.

There are early signs that the balance is starting to shift, and they show up on the issuance side. After a long drought, the market for new public offerings came back to life. In 2025 there were 354 initial public offerings in the United States — 136 more than in 2024 and 206 more than in 2023 — making it one of the best years for new listings since 2014. Companies raised about 70 billion dollars across all offerings, with traditional, non-SPAC IPOs accounting for roughly 44 billion of that, well above the prior two years.¹⁰ Figure 3 shows the recovery in the number of new listings. After the deep freeze of 2022 and 2023, the IPO window has clearly reopened.

I want to be honest about proportion here, because it is easy to overstate this. New issuance of roughly 70 billion dollars is still a rounding error next to a trillion dollars of buybacks. The regime has not flipped — companies remain, by a wide margin, net buyers of their own stock. What we are seeing is the leading edge of a possible change, not a completed one. But leading edges are exactly what deserve attention before they become consensus.

Three forces could push this further. The first is the enormous capital appetite of the artificial-intelligence build-out. The data centers, chips, and power that the AI era demands cost staggering sums, and companies that need to raise capital are not companies that buy back stock — they are companies that issue it, whether as equity or as the debt that competes with buybacks for the same dollars. The second is the backlog of large private companies that have stayed private for years and may finally come to market, adding supply that did not exist on public exchanges before. The third, and perhaps the most underappreciated, is interest rates. The buyback machine was built for a world of near-zero rates and cheap debt. In a higher-for-longer rate environment, borrowing money to retire stock is a far less attractive trade, while issuing shares at rich valuations becomes the smarter way to finance a business. Higher rates, in other words, quietly tilt the corporate calculus from buying stock toward selling it. When you add that insiders and private owners tend to sell into strength — and valuations today are anything but cheap — you have the ingredients for a genuine shift in who is supplying and who is absorbing shares.

Figure 3: Number of U.S. initial public offerings, 2023-2025. Source: Nasdaq.

The question is whether 2025's revival was a one-year blip or the first inning of a multi-year move from a buyback regime toward an issuance regime. I don't claim to know which. But it is precisely the kind of slow-moving structural change that is invisible in the headlines and enormous in its consequences.

This is where history earns its keep, because we have seen surges in the supply of new stock before, and the episodes rhyme in an uncomfortable way. Let's look at three of them.

Begin with the late 1920s. As stock prices climbed through that decade, the issuance of new securities climbed right alongside them. A whole industry of "investment trusts" — the closed-end funds of their day — sprang up to package and sell stock to an eager public, and in too many cases these vehicles became dumping grounds for otherwise unmarketable securities, sold to small investors who could not see what they were buying.¹¹ Notably, the flood of issuance did not dry up at the top; securities kept being created and sold well into the downturn. We know how that decade ended. The supply of paper had outrun the public's capacity to absorb it, and the crash that followed wiped out a generation of investors.

Now move to the late 1960s, the "go-go years." Fund managers were celebrated as "gunslingers," a performance cult took hold, and a wave of hot new issues came to market to feed the enthusiasm.¹² The broad market peaked in November 1968 and then ground lower into a trough in June 1970, a decline of about 30.6%.¹³ The new-issue cohort fared far worse than the averages: research on initial public offerings found that companies that went public between 1968 and 1972 — which accounted for roughly half of all IPOs in that era — delivered strongly negative long-run returns, and the celebrated "go-go" funds saw their values cut by 40% to 50% when the tide turned.¹² The lesson of the go-go years is that a flood of new issuance tends to arrive exactly when enthusiasm is highest and prospects are dimmest.

The clearest modern parallel is the dot-com era. From the second quarter of 1999 through the first quarter of 2000, more than 400 companies went public, over 70% of them internet-related, raising better than 33 billion dollars.¹⁴ The speculative fever was extraordinary: 146 of those offerings doubled in price on their very first day of trading, and the average first-day jump for internet IPOs ran north of 95%.¹⁴ Meanwhile, the Federal Reserve was tightening into the mania, raising its target rate to 6.5% by late 2000.¹⁵ When the supply of new paper finally overwhelmed the demand for it, the unwind was brutal. The Nasdaq Composite peaked in March 2000 and then fell 77% to its bottom in late 2002, and it did not reclaim that old high for roughly fifteen years.¹⁶ A more recent and milder echo came at the start of this decade, when a wave of new issuance and blank-check companies gave way to a sharp slump in new listings across 2022 and 2023.¹⁰

Pull these episodes together and a pattern emerges that bears directly on the questions clients ask about asset prices and interest rates. In each case, a surge in the supply of new stock coincided with — or shortly preceded — a major top, and in each case the backdrop was tightening money rather than easing. A flood of new shares is rarely the sign of a cheap, unloved market. It is the sign of a market where companies and insiders find their own stock attractive enough to sell, and where the public is eager enough to buy whatever is offered. Figure 4 shows how steep the drawdowns were once the supply of paper outran the supply of money willing to chase it. None of this tells us that today is 1929, 1969, or 2000 — the buyback bid is still firmly in place, and that is a crucial difference. But it does tell us that the supply of stock is a variable worth watching as closely as the supply of money.

Figure 4: Peak-to-trough index declines that followed past surges in new-stock supply. Sources: Federal Reserve Bank of St. Louis (FRASER); Nasdaq / NBER.

I want to be careful not to turn an interesting structural observation into a market call. Nothing here argues for selling stocks, and the most important fact in this whole discussion is that buybacks still dwarf issuance by a wide margin. The supply backdrop remains supportive today. What I am describing is a slow tide that could turn over years, not a wave about to break next week.

What it does argue for is humility about prediction and discipline in process. We do not need to guess the exact quarter when issuance overtakes buybacks, or whether it happens at all, to manage portfolios well through it. Our Adaptive Allocation framework is built precisely so that we don't have to rely on forecasts like that. It uses market regime detection to identify whether conditions have genuinely shifted from a bullish to a bearish environment, and dynamic beta targeting to adjust how much market exposure portfolios carry as the evidence changes. The balance between the supply of shares and the supply of money is one of many signals that shape the broad market regime; it is not something we trade on in isolation, and it is not something we ignore. The discipline lives in the rules, not in any one person's read of the headlines.

So we stay diversified across asset classes and geographies, we size exposure to each client's actual risk tolerance, and we let a rules-based process respond to the data as it arrives rather than to the story of the moment. If the tide of shares does begin to turn in earnest — if companies move from buying their stock to selling it, and the float starts to grow rather than shrink — that is the kind of durable change a regime-aware process is designed to catch. Our team will continue monitoring the pace of buybacks, the health of the IPO and issuance markets, the path of interest rates, and the growth of the money supply as the evidence comes in.

The supply of shares is one of the most powerful forces in markets that almost no one talks about. For fifteen years it worked quietly in investors' favor, as the corporate sector spent trillions removing stock from circulation while the Fed kept the system flush with money. That combination — growing money and a shrinking float — is a large part of why this bull market has been as durable as it has. The early signs of a shift toward issuance and IPOs do not mean that backdrop has reversed; it has not. But they are worth watching, because every time in the past century that the supply of new stock has surged in earnest, it arrived near the top rather than the bottom. History rhymes; it does not repeat. The job is not to predict the turn but to stay disciplined enough to respond to it. As always, if you have questions about your portfolio, please reach out.

All my best,

Brandon VanLandingham, CFA, CMT, CFP

Founder / CIO

1. S&P Dow Jones Indices, "S&P 500 Q4 2024 Buybacks Increase 7.4% and 2024 Expenditure Sets New Record by Increasing 18.5%," Corporate News, 2025; CNBC buyback coverage, 2025.

2. S&P Dow Jones Indices, "S&P 500 Q1 2025 Buybacks Set Quarterly Record at $293 Billion, Up 20.6%, Helping EPS Growth," press release, June 25, 2025.

3. CNBC, "The stock market's secret sauce: Buybacks are on pace for a record in 2025," August 6, 2025 (citing Morningstar estimates).

4. Brookings Institution, William Lazonick, "Stock Buybacks: From Retain-and-Reinvest to Downsize-and-Distribute"; figures on repurchases as a share of operating income via related Federal Reserve and NBER research.

5. Federal Reserve Board, FEDS Notes, "Equity Issuance and Retirement by Nonfinancial Corporations," June 16, 2017.

6. U.S. Securities and Exchange Commission, Rule 10b-18 (issuer repurchase safe harbor, adopted 1982; amended 2003); SEC, "Issuer Repurchases: Rule 10b-18."

7. Bank for International Settlements, "Equity Issuance and Share Buybacks," BIS Quarterly Review (analysis of debt-financed buybacks and the post-2009 low-rate environment).

8. Federal Reserve Board, H.6 Money Stock Measures, M2 (seasonally adjusted), April 2026 release.

9. Federal Reserve Bank of St. Louis, "The Rise and Fall of M2," On the Economy, May 2023.

10. Nasdaq, "IPO Market Gained Strength in 2025" (U.S. IPO counts and capital raised, 2023-2025).

11. National Bureau of Economic Research, "Securitization in the 1920s"; U.S. Securities and Exchange Commission, remarks on the origins of the Investment Company Act and 1920s investment trusts.

12. National Bureau of Economic Research, Jay R. Ritter, "The Really Long-Run Performance of Initial Public Offerings"; U.S. Securities and Exchange Commission, Arthur Levitt, "Remembering the Past: Mutual Funds and the Lessons of the Wonder Years," 1997.

13. Federal Reserve Bank of St. Louis (FRASER), "Major Postwar Bear Markets" (November 1968 peak to June 1970 trough, a 30.6% decline).

14. National Bureau of Economic Research, Ofek and Richardson, "DotCom Mania: The Rise and Fall of Internet Stock Prices," Working Paper 8630.

15. Federal Reserve, federal funds target rate history; Federal Reserve Bank of St. Louis, Federal Funds Effective Rate (FEDFUNDS), tightening cycle July 1999 to mid-2000.

16. Nasdaq market history; National Bureau of Economic Research research on the dot-com bubble (Nasdaq Composite peak March 2000, 77% decline to October 2002 trough).

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