How novelty and narratives drive the stock market

 Mark S Rzepczynski

“Where there is novelty, there is instability. Where there is instability there is uncertainty. Where there is uncertainty there are narratives — narratives are the currency of uncertainty.” Nicholas Mangee, associate professor of finance in the Parker College of Business at Georgia Southern University, US begins the book How Novelty and Narratives Drive the Stock Market with a statement that encompasses the problem he tackles and the compelling reason for investor interest in the new-style thinking that addresses it.

This detailed stock market study attempts to extend Nobel Prize-winner Robert Shiller’s development of narrative economics, albeit Mangee’s focus is on novelty information embedded in textual news narratives. Using a set of text-based indices to capture the uncertainty and ambiguity in unscheduled news, Mangee measures the impact of news narratives on equity behaviour.