Tips for Reading Financial News

The first in a series of CFA Institute articles on how to read financial news addresses the issue of consensus, noting how the expectations behind it form a “logical starting point for putting any financial news in the proper context.”

The article presents the following framework for interpreting financial news:

The article offers a list of things to look for in financial news:

  • Story Selection: Editorial choices such as placement of the story and depth of coverage offer insight, the article says.
  • Story Frequency: The frequency of a story “does influence public opinion and investor sentiment. If everyone is writing about a topic, it must be important or at least perceived as such.”
  • Framing: “How an event is framed affects the news and how it is perceived.” The article suggests that it helps to identify the political biases of the media as well as which are typically more optimistic or tend toward a short- rather than a long-term view.

Understanding consensus expectations, the article concludes, is only the first step of interpreting financial news stories. “The next step,” it concludes, “is filtering the narrative from the noise.”