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One who attempts to anticipate price changes and, through buying and selling contracts, aims to make profits. A speculator does not use the market in connection with the production, processing, marketing, or handling of a product. See: Trader.


An investor who takes large risks in the hope of making large short-term gains. Speculators often use technical analysis and other tools to make investment decisions on what securities to buy. They tend to buy stocks they believe will soon see a large growth in price and then sell them at the top of the market. Speculators are controversial because some believe that they contribute to the creation of bubbles; however, others believe that they provide liquidity necessary for the market to function.


A person who is willing to take large risks and sacrifice the safety of principal in return for potentially large gains. Certain decisions regarding securities clearly characterize a speculator. For example, purchasing a very volatile stock in hopes of making a half a point in profit is speculation, but buying a U.S. Treasury bond to hold for retirement is an investment. It must be added, however, that there is a big gray area in which speculation and investment are difficult to differentiate. Also called punter.


When you make a financial commitment because you believe something will happen in the market where you're trading that will provide a profit, you are acting as a speculator.

For example, you might invest in a bankrupt company because you expect that it will emerge from bankruptcy and its stock price will rise at some point in the future. Or you might purchase futures contracts or buy or sell options because you think the contracts might increase in value.

In contrast, hedgers buy futures and options to protect their financial interests. For example, a baker who buys a wheat futures contract in order to protect the cost of producing bread is hedging the risk that wheat prices will rise. She's willing to spend a certain amount to protect against a potentially larger loss.




a dealer in markets characterized by rapidly changing prices (such as a COMMODITY MARKET, STOCK EXCHANGE, FUTURES MARKET or FOREIGN EXCHANGE MARKET) who buys and/or sells commodities or securities not because he trades in them but in the hope of making a short-term gain from movements in the prices of these commodities or securities. For example, in the stock exchange, a speculator may take a ‘bullish’ view that a particular share price will rise and gamble on this hunch by buying that share on short-term credit terms at the current price and reselling it at a higher price after a week or two, using the proceeds from the resale to pay the original seller. On the other hand, the speculator may take a ‘bearish’ view that a share price will fall and gamble on this hunch by arranging to sell these shares at the present price (even though he does not own any), using the proceeds from this sale to buy at a lower price the shares that he has promised to deliver a week or two later.

The activities of speculators within a market may be either stabilizing or destabilizing, depending on whether or not they take a collective view about future price movements. For example, if some stock exchange speculators feel that the price of a share is going to rise while other speculators feel that the price of the same share is going to fall, then the former would seek to buy the share, adding to demand for it, while the latter would seek to sell the share, adding to the supply of it, and their efforts would cancel each other out, having little net effect on the share price. However, if most speculators take the view that a share price will rise, then they will all seek to buy it and thus artificially add to the demand for it and force up its price; while if most speculators take the view that the share price will fall, they will all seek to sell it, artificially adding to its supply and forcing the price down.

Whether speculators reduce or accentuate fluctuations in share prices over time depends on whether their collective view about future prices parallels the underlying price changes or moves in opposition to them. For example, if a share price is rising, and speculators take a collective view that it will continue to rise, then they will seek to buy it in the hope of reselling at a higher price, and this buying will accelerate the upward share price movement. On the other hand, if a share price is rising, and speculators take a collective view that it will begin to fall in the immediate future, then they will seek to sell the share in the hope of buying it back later at a lower price, and this selling will slow down the upward share price movement.

Speculators operate in both SPOT MARKETS and futures markets and often make considerable use of OPTIONS in their dealings. For example, a speculator may purchase a share option that entitles him to buy a certain number of a company's shares at a predetermined price at some future date if he thinks that the share price will increase to more than the predetermined price plus the cost of the option, for then he can gain by exercising the option and immediately reselling the shares at the higher price. See also ARBITRAGE, HOT MONEY, STAG, TOBIN TAX.

References in classic literature ?
All the time Fyne felt subtly in that man's manner a derisive disapproval of everything that was not lower middle class, a profound respect for money, a mean sort of contempt for speculators that fail, and a conceited satisfaction with his own respectable vulgarity.
The small boys, who are great speculators on the prowess of their elders, used to hold forth to one another about Williams's great strength, and to discuss whether East or Brown would take a licking from him.
They're not merchants, you know: they're speculators.
Ill-bred and ill-informed, he had (on his own showing) fluked into fortune on a rise in land; yet cunning he possessed, as well as malice, and he chuckled till he choked over the misfortunes of less astute speculators in the same boom.
Even in the brains of the wildest speculators, there had sprung up no long rows of streets connecting Highgate with Whitechapel, no assemblages of palaces in the swampy levels, nor little cities in the open fields.
About twelve years previously a Colorado real-estate speculator had made up his mind that it was wrong to gamble in the necessities of life of human beings: and so he had retired and begun the publication of a Socialist weekly.
A man kept me to breed chil'en for market, and sold 'em as fast as they got big enough; last of all, he sold me to a speculator, and my Mas'r got me o' him.
In another, the ground was cumbered with rusty iron monsters of steam-boilers, wheels, cranks, pipes, furnaces, paddles, anchors, diving-bells, windmill-sails, and I know not what strange objects, accumulated by some speculator, and grovelling in the dust, underneath which - having sunk into the soil of their own weight in wet weather - they had the appearance of vainly trying to hide themselves.
I can no more tell you the whys and wherefores of myself than I can lift myself up by the waistband and carry myself into the next county, as some one challenged a speculator in perpetual motion to do.
Any sort of claimant, with any sort of wild tale of prior invention, could find a speculator to support him.
We do not mean that his voice was a mere thread, such as we sometimes hear issuing from the mouth of these walruses; on the contrary, it was a strong voice, but stifled, an idea of which can be given only by comparing it with the noise of a saw cutting into soft and moistened wood,--the voice of a worn-out speculator.
Henry Half acre was a speculator in town-lots--a profession that was, just then, in high repute in the city of New York.