Markets aren’t ruled by spreadsheets. They’re ruled by stories.
Think about it: when was the last time you heard someone at a dinner party brag about their discounted cash flow model? Never. But you’ve definitely heard someone say: “This coin is going to change the world,” or “This stock is the future of AI.”
That’s narrative gravity — the invisible pull that keeps capital, attention, and emotions orbiting around a storyline, even when the math doesn’t add up.
The dot-com bubble? That was the story of “the internet will change everything.” 2008? The story of “housing never goes down.” Crypto in 2017? The story of “decentralization will rewrite the rules.”
The truth is, these stories weren’t wrong in the long run. The internet did change everything. Housing did recover. Crypto is reshaping the system. But in the short run, narrative gravity bends markets in irrational ways. Valuations inflate. Risk gets ignored. And then — when the story loses steam — prices fall back to Earth.
I like to think of narrative gravity like the orbit of a planet. Too close, and you get burned in the hype. Too far, and you miss the rocket ride. The art is to surf the orbit: enter when the narrative is strong but not overheated, exit before it collapses under its own weight.
We’ve talked before about the dangers of FOMOphobia and Echo Trades — how copying others can suck you into trades with no foundation. Narrative gravity is what makes those traps so sticky. It’s not just math. It’s myth. And myths are powerful.
👉 Next time you feel the pull of a trade, ask yourself: am I chasing data, or am I caught in someone else’s orbit?
🔗 For a primer, check out Robert Shiller’s work on narrative economics. His research shows just how much stories — not numbers — drive markets.
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