A few days ago, the news service Bloomberg carried an article that gave a somewhat disquieting look into the future of investment research. Actually, I shouldn't say future because this kind of thing is already happening, one just doesn't know at what scale yet. The article was titled 'Oil Traders Are Now Watching Workers' Phones to Spot Problems at Refineries'. It described how there are companies can supply live or near-live phone location data on any part of the world.
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It turns out that oil traders watch refineries around the world and can tell, from the pattern of phones in refinery locations, where workers are and if there are any unusual pattern of workers. From this, they can infer refinery problems including work stoppages and accidents and other confidential information about refinery operations. The article is illustrated with photographs that look like something out of a James Bond movie--satellite shots of refineries with hundreds of coloured dots, each signifying one phone.
Except that this is not a movie--it's already happening. The tracking service named--one Orbital Insight--must be just one among many and data appears to be available for the asking. It's easy to see how almost any kind of investments research can be taken to a whole new level by using such data. Monitoring of almost any industrial plant, or retail location, or any set of locations associated with a business would certainly yield high quality information on a real-time basis. In many cases, analysts would have to learn to interpret the data to derive usable information. However, for monitoring industries like retail and real estate, this must be trivially easy. In another example, an analyst was able to figure out an increase of production in Tesla's plant before it was known through any other channel.
The explanation for the source of the data is somewhat alarming but hardly comes as a surprise. The article says that this particular company 'can access location data for more than 800 million mobile devices worldwide through vendors,' and that 'Virtually all of the data originates from mobile apps or providers of software development kits for mobile apps that have geolocation routines built into their offerings.' Of course, everyone involved claims that the data is anonymised but one must take that with a pinch of salt.
It's interesting to speculate how much investment research will change as usage of such data becomes widespread. Almost all such research is based on capturing data and then mounting some analysis on it. For a long time now, there's been a reasonable democratisation of the data and the advantage of research largely depends on the quality of the analysis. By and large, unconventional sources of data were not widely available, or had to be collected by original effort. However, mass availability of phone data introduces a new factor in that equation. Some people will have access to data that few others have, or that only well-heeled institutional investors have. In a very real sense, this reverses the democratisation of data availability.
Of course, for many businesses, the main worry would be to defend against such information leakage. I'm sure there must be industries that will be thinking seriously thinking up strategies to prevent this by a variety of means. Perhaps that is possible when the phones are being carried by employees, but for retail and real estate, where the phones are being carried by customers, it's hard to think of any reasonable defence.
For the most part, one can assume that in many industries, investment research is being transformed by the new reality of ubiquitous geolocation and live tracking of almost everyone in the world.