Benefits of narrative-based forecasting

Nicholas Mangee ()

Chapter 3 in Narrative Analytics and Stock Market Forecasting, 2025, pp 32-45 from Edward Elgar Publishing

Abstract: The premise of this book is that narrative factors can help forecast stock market performance. To assess this hypothesis in a tractable sense, it must be clear where, and how, narrative dynamics enter the forecasting strategy. Yes, stories help us remember. They help make personalized connections with other people and with information. Stories help you feel emotions such as sympathy and empathy, particularly for people and their circumstances. Stories resonate with us as humans through shared experiences. These features of effective storytelling notwithstanding, this chapter makes a case for the less-discussed characteristics of stories that help with forecasting under uncertainty. Two main areas will be considered: relevance realization and contextualized meaning. The chapter provides a narrative-centric argument for both realms of forecasting characteristics by incorporating insights from cognitive sciences. The chapter closes with a case study about the possible narratives that shaped the regional mortgage lending banking crisis of early 2023.

Keywords: Relevance realization; Contextualized meaning; Forecasting under uncertainty; Regional banking crisis (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035357598
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