BBRG: Market Narratives Have Pushed Aside Fundamentals

The response, as evidenced by a range of mergers, was both. Therefore it is with markets: Narratives and their infectiousness, storyline and virality.

Stories have been an effective force in markets ever considering that speculators gathered in the late 1700s under a buttonwood tree at the foot of Wall Street to buy and sell securities. I have been believing about this as it connects to the current period of argument on whatever from crypto to inflation to meme stocks. I kept returning to the question “What if Narrative was EVERYTHING?”.

” It isn’t that whatever comes down to stories. Movements in stock costs are quite considerably driven by narratives, and particularly so at the aggregate or sector level. The same is real with seasonal narratives.
A story becomes freshly on everybody’s lips not since it is real however since its contagion rate has gone up or recovery rate has actually gone down, simply as infections can see unexpected new spread because of a subtle anomaly. Contagion rates of stories are impacted by such things as superficial similarity to current events, celeb connections, and even sometimes by their outrageous daring fallacies.”.

This is parallel to the innovation arguments of the late 1990s: What mattered more, Content, or the Pipes to provide that content? Which is more crucial, HBO, or Time-Warner Cable?

I wish to share some background about todays column, with some thoughts that (for factors of length) I did not include in the piece:.

If these subjects are of interest, 2 books delve deep into them and are well worth your time: Shillers ” Narrative Economics: How Stories Go Viral and Drive Major Economic Events;” and Derek Thompsons Hit Makers: How to Succeed in an Age of Distraction.

When made up the basic laws of investing, market Narratives Have Pushed Aside Fundamentals Logic and mathematics. No more. Bloomberg, June 17, 2021

Yale teacher Robert Shiller is the expert here, and in an e-mail exchange, he recommended that narrative is only part of the story-telling formula– how story contagiousness is just as important:.

If you do not wish to check out two books on the topic, maybe I can intrigue you in 800 words on the matter:

See: Market Narratives Have Pushed Aside Fundamentals

” It isnt that whatever comes down to stories. Movements in stock rates are rather considerably driven by narratives, and specifically so at the aggregate or sector level.

Market Narratives Have Pushed Aside Fundamentals Logic and mathematics when made up the basic laws of investing. Stories have actually been an effective force in markets ever considering that speculators gathered in the late 1700s under a buttonwood tree at the foot of Wall Street to purchase and sell securities. I kept coming back to the question “What if Narrative was EVERYTHING?”.

Author: NEWS

Leave a Reply