Using narratives to forecast fundamentals

Nicholas Mangee ()

Chapter 13 in Narrative Analytics and Stock Market Forecasting, 2025, pp 187-194 from Edward Elgar Publishing

Abstract: There is a widespread view among researchers that narratives’ impact on asset markets – and on individual decision-making more broadly – is disconnected from fundamentals. Thinking intentionally through a cognitive narrative framework about the processes of relevance and meaning for the future is subsumed to reflect gross irrationality. If only the viral contagion of illogic could be eradicated, then future outcomes would more closely correspond to intrinsic values. The present chapter presents findings suggesting an alternative view of narrative dynamics. Under NNH, narratives, in addition to helping forecast stock market outcomes, help to forecast future informational factors through relevance realization. To proxy for narrative dynamics, the analysis builds on the Google Trends searches for firm-level narratives and macroeconomic and political narratives introduced in chapters 9 and 12, respectively. Several empirical tests suggest that narratives contain useful information about future fundamentals, both at the firm and market level.

Keywords: Narrative-focused fundamentals; Firm financial ratios; Market valuation; Structural change (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035357598
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/doi/10.4337/9781035357604.00018 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:24396_13

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Jack Sweeney ().