speculation

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Speculation

Purchasing risky investments that present the possibility of large profits, but also pose a higher-than-average possibility of loss. A profitable strategy over the long term if undertaken by professionals who hedge their portfolios to control the amount of risk.

Speculation

An investment with an exceptionally high risk. Speculators may invest in a start-up company or in a volatile commodity. These risks carry the possibility of very high returns. Speculators often trade actively and many have hedging strategies to reduce their risks. See also: Hedge fund.

speculation

The taking of above-average risks to achieve above-average returns, generally during a relatively short period of time. Speculation involves buying something on the basis of its potential selling price rather than on the basis of its actual value.

speculation

the buying and selling of COMMODITIES (tea, tin etc.), FINANCIAL SECURITIES (shares etc.) and FOREIGN CURRENCIES whose market prices are characterized by substantial fluctuations over time, by individuals and firms (speculators) in the hope of making windfall profits. For example, in the STOCK MARKET and FOREIGN EXCHANGE MARKET, a speculator may take a ‘bullish’ view that a share price or the exchange rate of a currency will rise and may gamble on this possibility by buying that share or currency, using either his or her own money or short-term credits, and hoping to resell it at a higher price after a few days or weeks, in order to make a capital gain on the difference between the two prices. On the other hand, the speculator may take a ‘bearish’ view that a share price or currency value will fall and may gamble on this possibility by selling the share or currency (even though he or she does not currently own any), using the proceeds from this sale to buy at a lower price the shares or currency he or she has promised to deliver a week or two later.

Speculative activity may have a destabilizing effect on share prices or exchange rates if speculators take a collective view that prices will rise or fall, accelerating and magnifying upward or downward price movements. Because of the disruptive effects of speculation on international trade, countries' central banks often intervene in the foreign exchange markets to maintain ‘orderly’ exchange rates. See ARBITRAGE, FORWARD MARKET, FLOATING EXCHANGE RATE SYSTEM, STAG, ACCOUNT PERIOD.

speculation

the purchase or sale of ASSETS, real or financial, to achieve a CAPITAL GAIN.

See ARBITRAGE, SPECULATIVE DEMAND FOR MONEY, SPECULATOR.

speculation

Investment decisions based on the hope and expectation there will be a profit, but no firm evidence that this will be the case. As a general rule, the more speculative the venture, the greater the reward should be,commensurate with the risk taken.

References in periodicals archive ?
It is being speculated that state finance minister Nitin Patel, who is handling health, medical education, family welfare & transport, may get the coveted position
Saturday to man the standby Emergency Operations Center (EOC) in City Hall, to monitor worldwide events and respond to any problems that experts had speculated could result from older computers' inabilities to recognize the four-digit date change.
In the case of the Oil Creek Prospect, Tri-Valley geologists, engineers and geophysicists have speculated a potential, if all six horizons are hydrocarbon-saturated, in the range of 125 million barrels of oil and 125 billion cubic feet of natural gas, all unproven at this stage.
Thompson and others had speculated that debris thrown up during an impact that left behind a large crater named Shoemaker settled back into and filled many of Eros' other craters (SN: 10/27//01, p.
The CFO also speculated that discussions in Internet chat rooms about the stock could be spreading misinformation about the firm's prospects.
About ten years into this search, Folkman published a paper in which he speculated that tumors could not grow larger than the size of a pencil tip unless nourished by their own networks of tiny blood vessels.
Previously, scientists had speculated that the inner zone of a plume consists of molten rock from the lowermost mantle and that the outer layers include material dragged along from higher mantle regions as the plume ascended.
In tests, the researchers failed to identify the protective ingredient, but they speculated that it could be the hops.
We speculated that transfer of DNA between hosts and parasites was a two-way street, but they actually documented that fact.
On Friday, Holland speculated what may have led to the attack.
Before the experiments, he speculated that, by preventing programmed cell death and encouraging inflammation, IKK-beta also promotes the emergence and growth of tumors.
McAteer speculated that the number of deaths and injuries is climbing rapidly because more mines - particularly gold operations in Northern California - have opened in the past three years with ambitious production goals.