Stock market forecasting under the Novelty-Narrative Hypothesis

Nicholas Mangee ()

Chapter 1 in Narrative Analytics and Stock Market Forecasting, 2025, pp 1-13 from Edward Elgar Publishing

Abstract: Stories transcend time, yet are unique to the zeitgeist of the moment. They reflect the persistence of the past, yet are nimble enough to foreshadow the future. Stories help shape a deeper understanding, above that which numbers alone can provide, of a world best characterized by unforeseeable change. This chapter introduces the forecasting component of the Novelty-Narrative Hypothesis (NNH). It describes for the reader the challenge facing all stock market participants as they attempt to map today's information onto meaning for tomorrow's expected outcomes. In doing this, the chapter emphasizes the natural and necessary role of narratives in forecasting stock returns and volatility in a world best characterized by its rampant instability and unwavering uncertainty. The arc of the book is shaped for the reader as each chapter's main contributions are briefly discussed. Focus is also paid to the two pillars of forecasting under NNH, namely relevance realization and contextualized meaning.

Keywords: Stock market forecasting; Novel events; Stock market instability; Novelty-Narrative Hypothesis; Relevance realization; Contextualized meaning (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035357598
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