The Importance of Narrative Management

With the penetration of AI applications, the interpretation power of industry/company analysis has rapidly shifted from traditional investment bank research reports to individuals. Everyone can now quickly familiarize themselves with an industry or company using AI.

However, the flip side of widespread dissemination is extreme simplification. Investors' focus has shifted from lengthy analysis reports spanning dozens of pages to a few condensed bullet points. For example, under the megatrend of reindustrialization, infrastructure household registration, or bulk resources under macro management changes—highly simplified keywords can quickly achieve consensus and attract more liquidity. This capability is called Narrative Management, and in the AI era, it has become a scarce skill for corporate management.

When a company's narrative is embraced by more investors, it leads to changes in market pricing, reflected in valuation metrics like P/E. For DAT companies, it manifests as changes in mNAV. This change can be seen as the second derivative of stock price, acting as an accelerator for price fluctuations.

A top executive with excellent narrative management skills can also bring Alpha (both excess returns and risks) to the company. Elon Musk is a classic case, and I believe Tom Lee is another.