Narratives shape which facts investors emphasize — and prices can shape fundamentals.
| Concept | Explanation | |---|---| | Expectation | Belief about future growth, earnings, rates, policy, or adoption. | | Narrative | A simplified explanation that organizes facts and influences attention. | | Reflexivity | Market prices and behavior can influence the fundamentals they are supposed to reflect. | | Feedback loop | Rising prices attract attention and capital, which can further support prices. | | Expectation gap | Difference between what occurs and what the market had anticipated. |
Narratives matter because they shape which facts investors emphasize. However, narratives can become detached from measurable economics.