If you traveled back to 1975 and bought shares in the world’s largest companies, you would be buying steel, bricks, and heavy machinery. At that time, 83% of corporate market value consisted of physical assets. Basically, the economy was all “hardware.” 

Today, the situation has completely reversed: according to studies by the firm Ocean Tomo [1], 92% of the value of the S&P 500 is intangible. 

Welcome to the economy of dematerialization. When you invest in today’s major companies, you’re no longer buying physical infrastructure; you’re buying code, algorithms, databases, patents, and people’s attention. The modern corporate world has become “software.” 

In his seminal book “Capitalism without Capital”, Jonathan Haskel and Stian Westlake explain that this paradigm shift requires new rules. Dematerialized assets do not behave like goods from the industrial era, but are governed by four key dynamics: 

• Infinite scalability: An algorithm can be used by millions of people simultaneously around the world without any additional production costs. A factory, on the other hand, always has a physical capacity limit.
• Sunk costs: If a tech company goes bankrupt, it cannot break down its source code and sell it piece by piece to recoup its investment, as it would if it were liquidating tractors or real estate.
• Spillover of ideas: It is much easier for competitors to copy a successful interface or an innovative business model than to replicate an entire physical and logistical supply chain.
• Massive synergies: Ideas and data multiply in value when combined. A good artificial intelligence algorithm paired with a massive user base creates an exponential competitive advantage. 

Understanding this transition is essential to modern analysis. The most valuable capital of the 21st century is no longer that which assembles parts, but that which processes information. In fact, data from the McKinsey Global Institute [2] show that companies leading the way in investment in intangible capital are growing at a significantly faster rate than their traditional competitors. 

If we view business through the lens of the physical world, expecting its rules to continue to dominate, we will fall behind. The true wealth of our time no longer occupies space in a warehouse; it lies in the architecture of its networks. 

Matías Márquez 
Financial Funds Analyst, Fynsa AGF 

[1] Intangible Asset Market Value Study – Ocean Tomo 

[2] Getting tangible about intangibles: The future of growth and productivity? | McKinsey