Market Narratives Have Pushed Aside Fundamentals
Logic and mathematics once made up the basic laws of investing. No more.
It’s story time.
Photographer: Hulton Archive/Getty Images
Filmmakers use the phrase “Narrative Is Everything” to emphasize the importance of storytelling to their craft. They understand how a good storyline communicates to the viewer, draws them in and makes them root for the protagonist. Without a good narrative, even the best casts inhabiting the most wonderful characters risk failing to entertain. Great narratives can terrify you, warm your heart, or compel your attention.
It seems that narratives have everything to do with markets these days, which is also creating new risks for investors. The biggest, most divisive debates are about stories rather than fundamentals, ranging from the utility of cryptocurrencies to whether the current spike in inflation is transitory, and from whether sky-high valuations are warranted to whether there is too much fiscal and monetary stimulus.