Stories are important models yet flawed

“Partial knowledge is more often victorious than full knowledge: it conceives things that are simpler than they are and therefore makes its opinion easier to grasp and more persuasive."    - Nietzche 

"History will justify anything. It teaches precisely nothing, for it contains everything and furnishes examples of everything."

- Paul Valery 

Storytellers are model builders. There is a need to describe the causal basis of experiences. A stream of events needs some causal explanation or sense-making that is realistic and comprehensible. A story will use stylized facts to support an argument, but stories are not the same as models. It is a process of causal inference that is not always based on empirical testing from large samples of data. 

Stories are especially important when data are limited or uncertainty is high. In environments of radical uncertainty or complexity, a story or narrative is a useful tool for describing the environment and making sense of causal relationships. 

Organizations use stories to help explain their actions. The story will serve as a model for how an organization behaves. Nevertheless, these stories focus on certain mythical themes: rationality, hierarchy, individual leader significance, and historical efficiency.

The story can be flawed, so investors must question the underlying assumptions behind any story, no different from how model assumptions are reviewed and tested. Stories should be reviewed through a rigorous process to avoid flawed logic based on partial knowledge.