There is a persistent belief in investing that markets reward discipline: analyse financial statements, identify undervalued companies, and wait patiently for the market to recognise their worth. It is a comforting idea – but, at times, a misleading one.
In reality, markets are not driven by spreadsheets alone. They are driven by stories.
This is the central insight of narrative economics, a framework developed by Economics Professor Robert Shiller, who argues that economic outcomes are shaped not just by data, but also by the spread of compelling ideas – stories that behave less like facts and more like viruses.
