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By Staff Reporters
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Headline risk refers to the risk that a negative news media headline about one security issuer, incident or sector could affect the demand for and pricing of a much wider swath of securities, including those that have no direct relation to the securities headlined and whose fundamentals (defined above) remain intact.
Financial analyst Meredith Whitney’s appearance on “Sixty Minutes” in December 2010 was a classic example of the potential impact of headline risk, when her prediction of “a spate of municipal bond defaults” helped trigger a massive municipal bond market selloff, even though most municipal bonds actually faced no immediate default threat at that time, and the number of municipal defaults actually declined in the subsequent 12 months.
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Filed under: "Ask-an-Advisor", Accounting, Experts Invited, Financial Planning, Glossary Terms, Investing, Marcinko Associates | Tagged: financial, headline risk, Marcinko, Media, meredith whitney, risk, Risk Management, sixty minutes | Leave a comment »
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