For stock pickers, choosing among a smaller universe of stocks is much more difficult, writes Jason Zweig in a recent Wall Street Journal article.

Zweig cites data from the University of Chicago’s Booth School of Business showing that the number of publicly traded equities has dropped from 7,355 in 1997 to the current level of less than 3,600.

The decreased number of stocks, writes Zweig, is attributable to regulatory tape (that makes it tougher for smaller companies to go public), the large sums of venture-capital funding available (so smaller companies can stay private for longer periods of time), and the increase in private-equity funds (whose buyouts take shares off the market).

According to Michael Mauboussin, investment strategist at Credit Suisse, the smaller pool of public companies presents a challenge for stock pickers because those companies tend to be “fewer, bigger, older, more profitable and easier to analyze, making stock picking much more competitive.” This scenario, writes Zweig, “should make all investors more skeptical about the market-beating claims of recently trendy strategies.”

Mauboussin points out that most of the research on historical returns is based on “days when the stock market had twice as many companies as it does today,” suggesting that the conclusions drawn could be misguided. Zweig cites the example of factor investing, arguing that the historical performance of many factors “may have been driven largely by the tiniest companies—exactly those that have disappeared from the market in droves.”