In Ben Hunt's view, narrative is king.
Hunt, a Ph.D. and Chief Risk Officer at asset management firm Salient Partners, is the author of Epsilon Theory, a sometimes-zany, wildly popular newsletter that's read by more than 100,000 investors and others in 180 countries. Epsilon Theory, often chock full of quotes, cartoons and Hunt's personal reflections, presents views of capital markets through the lenses of game theory and history.
In Epsilon Theory's latest installment, Hunt argues that Ray Dalio's theory of the Economic Machine is not quite adequate to describe what happens in today's policy-controlled market -- which is where Hunt's own Narrative Machine theory comes in handy.
Quid's part in the Narrative Machine, according to Hunt, is that it has "developed a novel process for seeing the invisible world of contextual connections and networks," he writes. He then looks at the narratives surrounding Brexit using the "Quid microscope."
In Quid, Hunt analyzed 2,422 Brexit stories published by Bloomberg before the June 23 Brexit vote, along with 4,283 Bloomberg stories mentioning Brexit in the month after. These are essentially "snapshots of the Narrative Machine," he writes. In the data before the vote, he saw a "complacent Narrative," whereas after, it became an "engaged Narrative," accompanied by a significant -- and, it turns out, critically important -- change in sentiment.
Read the full blog here.
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