This question has come up several times in tweet streams and informal conversations. I am going to post a detailed answer here. It will be longer than a tweet or a paragraph, because this is a deep issue. Please give me a day or two to write it.
(Revised March 5, 2019) A formal answer to this question is now published in the Sovrin library, at https://sovrin.org/wp-content/uploads/2019/03/What-if-someone-steals-my-phone-040319.pdf.