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Real-Time Risk by Steven Krawciw, Irene Aldridge

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CHAPTER 7The Analysis of News

  • —Why are trading floors quiet?
  • —All the robots are thinking.

News surrounds us. It shouts at us from the television. It pops up at us when we use our computers. It streams across monitors. Now, it tweets at us, too. Nothing is more real time than the news, and nothing carries word of calamities, scandal, failures, and disappointments as fast as the news.

Exposure to real‐time risk from the news comes in many forms. The value of understanding news is not only in general event awareness but also in understanding the impact of those events. There is risk in being late to hearing about the news, and there is also the challenge of digesting the news across all of the aspects that matter to your investments. In this chapter, we review news from a risk management point of view to understand how events that carry risk are communicated and analyzed today.

Investors, market makers, traders, and risk managers are watching for news that affects their portfolios of investments. Information is gleaned from earnings announcements, government indexes, and the growing volume of streaming data from the Internet of things (known as IoT). This IoT, discussed in the next chapter, is a vast array of numbers that comes from all of the wireless devices that are collecting and sending information about the movement of goods, the conditions of agriculture, and the weather, to name a few.

But what is news? News is defined as newly received information. In the strictest ...

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