The stock market has been hit by a major disruption in internet connectivity.
But new research by Oxford Economics shows that the disruption is not as bad as many have been led to believe.
The internet is no longer a threat, and this is not just because the internet has improved.
In fact, the internet’s ability to reach a vast number of people is now almost completely in the hands of the private sector.
And it is doing so despite the public not even being able to see what is happening.
“The market is a lot better now than it was a year ago,” says Paul Rowntree, chief research officer at Oxford Economics.
“[We] have found the public can still see and understand the market in real time, but it has slowed to a crawl.”
Rowntree is one of the leading figures in the world of data analytics.
He is the co-founder and director of Cambridge Analytica, a firm that uses machine learning to target individual investors and create sophisticated investment strategies.
It was Rowntrie who told us about a new paper that found that the internet was not really hurting the market.
He and his team had been monitoring data on the stock exchange in London for a year, and then noticed something that shocked them.
They had been following the ticker prices of over 2,000 companies on the London Stock Exchange.
The market was down by about half a per cent on a regular basis since 2013, but the price of each stock was flat.
Instead, the average price of the stock rose by a quarter over that time.
If you looked at the entire period, the number of shares trading on the tickers dropped by over one per cent, Rowntrees research found.
At the same time, the volume of stock trading on their website was also dropping.
But what was even more startling was that, despite the huge drop in trading volume, the share prices of the companies were actually rising.
A simple graph from Oxford Economics showing the percentage increase in price of stock traded on the index since 2013.
When Rowntreys team looked at their data, they saw that companies that were struggling were still doing well.
For example, Coca-Cola saw a 10 per cent increase in their share prices over the year.
In contrast, the price per share of Apple fell by a third.
Another example from the study shows that if you looked only at companies that went public in 2017, they all made big gains.
Apple, Coca Cola, and General Electric all rose by 10 per to 15 per cent over the next five years.
However, the biggest gainers were Alphabet, the parent company of Google, and Facebook, which saw its share price rise by more than 70 per cent.
What the Oxford researchers also found was that these companies were doing so by generating a lot of new revenue.
Specifically, their revenue grew by around 80 per cent in the first five years after going public.
This meant that even though the internet had reduced the number and value of shares that could be traded on their websites, they were still earning a substantial amount of money from new trading.
That is because the companies themselves were creating new jobs through new advertising, and were creating value by selling digital goods to consumers.
Ruptrees team then went on to develop a mathematical model to understand what they were seeing.
It looked like it was getting very hard to predict exactly how these companies would fare in the future.
One way that the Oxford team could predict how these firms would perform was to look at the average growth rates of their stock price over the past five years, and how many of their shares were actually trading on those websites.
There was a clear pattern that emerged.
Facebook’s stock was increasing by around 50 per cent a year on average, while Apple’s was growing by about a third a year.
That is a trend that could easily be replicated by Google and Alphabet.
So why does this matter?
There are many things that the public is not seeing, and that are happening much more slowly than they should.
Because the internet itself is not doing anything to change the way that we buy and sell stocks.
Instead, we are seeing a slow but steady decline in the number, value, and activity of shares being traded on our websites.
This is the reason that we should not be worried about the internet.
Rather, we should be concerned about how this is affecting the public.
What does this mean for the stock markets?
It means that investors should be mindful that their money is in a precarious position.
To borrow a phrase from one of our most famous investors, Warren Buffett, if you put all your eggs in one basket, you might as well leave them all in one box.
Companies are taking advantage of the fact that the stock prices