You are right that there is no "magical" effect in doing buybucks. The price stays the same. But it will go up from there as the company continues to make money

You are right that there is no "magical" effect in doing buybucks. The price stays the same. But it will go up from there as the company continues to make money. If the net income remains constant, the EPS will be ~10% higher. When the company accumulates again the cash that it just paid the price of the stock will be ~10% higher than before (at constant PE ratio). In the case of dividends, the price goes down. If the company distributes 10% of its market-cap as dividends, the price will go down 10% (actually less because a 10% dividend represents less that that to the recipients after taxes). And as time goes by the price will recover. If the net income (and therefore the EPS) remains constant, the stock price will get back to the original price when they accumulate again the cash they just distributed (at constant PE ratio). Still, my point was that the long-term effect of the capital allocation choice (which cannot be anticipated by the market until they know that it has been made, or at least that it is going to be made, but in any case the information is not being incorporated into prices at the precise time of the actual transactions) is not the same as the short-term market effect. The capital allocation is usually implemented through a market operation but it doesn't even have to be the case (they could get the shares in an off-market operation, a real example is company A buying another company B which has a stake in A, they can then eliminate those shares). And even if it is done in the market, the effect on the price would be the same if any other party (let's say the Saudi Arabia sovereign fund) decides to buy a large position in the stock. If the buyback is a wise thing to do, you say, the price of the stock should be higher and the price is adjusted through the open-market repurchasing of shares. The problem is that if the buyback is not a wise thing to do, the market effect of the buyback is still to push prices up!