Headline Risk

AAA

DEFINITION of 'Headline Risk'

The possibility that a news story will adversely affect a stock's price. Headline risk can also impact the performance of the stock market as a whole.

INVESTOPEDIA EXPLAINS 'Headline Risk'

For example, in the aftermath of the housing crisis, mortgage lenders such as Bank of America, JP Morgan Chase and CitiGroup faced significant headline risk.


One way a company can mitigate headline risk is through effective public relations campaigns. Successful public relations efforts can promote positive images of a company that can help counteract any negative stories as well as provide swift damage control if such a story is released. Individual investors can counteract headline risk by using a buy-and-hold investing strategy that ignores the short-term changes in the market that are triggered by headlines.




RELATED TERMS
  1. Herd Instinct

    A mentality characterized by a lack of individual decision-making ...
  2. Behavioral Finance

    A field of finance that proposes psychology-based theories to ...
  3. Efficient Market Hypothesis - EMH

    An investment theory that states it is impossible to "beat the ...
  4. Cockroach Theory

    A market theory that suggests that when a company reveals bad ...
  5. Headline Effect

    The effect that negative news in the popular press has on a corporation ...
  6. Calendar Effect

    A collection of assorted theories that assert that certain days, ...
Related Articles
  1. Active Trading

    What Is Market Efficiency?

    The efficient market hypothesis (EMH) suggests that stock prices fully reflect all available information in the market. Is this possible?
  2. Active Trading Fundamentals

    An Introduction To Behavioral Finance

    Curious about how emotions and biases affect the market? Find some useful insight here.
  3. Trading Strategies

    How To Avoid Emotional Investing

    Most investors buy high and sell low, but you can avoid this trap by using some simple strategies.
  4. Options & Futures

    Market Problems? Blame Investors

    Investors are only human, and their irrational behavior can often move the market.
  5. Active Trading Fundamentals

    Leading Indicators Of Behavioral Finance

    Discover how put-call ratios and moving averages can be used to analyze investor behavior.
  6. Trading Strategies

    How to Do the Fundamental And Technical Combo Trade

    Fundamental and technical analyses should be viewed as complementary rather than competing practices. When combined, these two methods can greatly strengthen your game.
  7. Mutual Funds & ETFs

    How Trading ETFs is Different from Trading Stocks

    We explain when ETFs may be better suited than stocks for inclusion in a portfolio.
  8. Trading Strategies

    Scalping As A Novice Trader

    Scalping, a subset of day trading used by experienced traders, involves quick moves and decision making. We offer the basics for beginner scalpers.
  9. Trading Strategies

    The Top Five Stocks For Novice Swing Traders

    New to Swing Trading? Here are the top five stocks recommended for swing trading.
  10. Options & Futures

    Advantages Of Trading Futures Over Stocks

    We look at the top eight advantages of trading futures over stocks.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center