This year, the Dow and S&P have repeatedly hit record highs. But even as the value of the stock market grows, the number of firms traded on the market is shrinking, and it has been since the mid-1990s.

Imagine the stock market is a grocery store. Thirty years ago, the shelves would have been full with lots of stocks for sale. Walk into that same store today, and you’d find about half the shelves bare. 

“It’s been cut basically in half,” said David McGrath, chief equity strategist at Oakworth Capital Bank. “I want to say peaked at around 8,000 publicly traded companies in the U. S., and I think it’s below four [thousand] now.“

A big reason for the decline is more private financing, like private equity and venture capital, said McGrath.

But there’s also been a shift in what companies produce, according to René Stulz, finance professor at the Ohio State University. Back in the ‘90s,” the main firms on the stock market were manufacturing firms. They created value through tangible assets, having plants.”

By selling shares, firms could make more patented widgets. But Stulz said that fewer firms are producing physical things these days; instead, they’re focused on intangible assets.

“So it’s software that matters instead of hardware. It’s how you put people together; it’s how you devise schemes for what they do,” he said.

Some firms don’t want to reveal their schemes by going public — too many disclosure requirements.

“With intangible assets, it’s very easy for the competition to get a hold of them or to imitate you,” Stulz said. “You know, it’s not like Apple can patent its supply chain.

But there’s a problem with having fewer publicly traded companies, per Charles Hall, an analyst at Peel Hunt in London: It’s not great for our understanding of what’s happening in the economy.

“Yeah, really bad. I describe having companies quoted as a public good. They have to write a big brochure that says exactly what their gender pay gap is, what their sustainability targets are — huge amount of information,” he said.

Information that’s useful for investors and the public. Take Boeing, for example. “If something goes wrong at Boeing, it is all over the press,” Hall said. “If something goes wrong in a private company, it wouldn’t be nearly as catastrophic.”

Our political system rides on this too, added René Stulz. “It’s good for democracy to have transparency as to the economy.”

And, he said, it’s good for investors to have the chance to buy into successful companies.