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 ?
Much of the social science literature on globalization has focused narrowly on economic aspects and on the way international trade, the flow of finance capital, the activities of multinational corporations and currency speculation have fostered far more frequent exchanges and a growing interdependence between the world's nation states.
Craig Burnside, Duke University and NBER; Martin Eichenbaum and Sergio Rebelo, Northwestern University and NBER; and Issac Kleshchelski, Northwestern University, "The Returns to Currency Speculation"
Though his currency speculation scheme was truly harebrained, Ponzi was not without his talents.
On the contrary, it's recognizing that currency speculation isn't the company's area of expertise and that it's willing to incur the expense of the hedging contract in order to lock in the remaining profit.
For example, there is Milton Friedman's point that there is a presumption that currency speculation will be stabilizing, for destabilizing speculation is unprofitable.
Krueger said the plan would include temporary foreign exchange controls to avoid currency speculation.
Currency speculation in Nepal has a long history, which can be seen by the actions of Kaji Narayan Bhakta in 1946 who often withheld supplies of IC in an attempt to influence the exchange rate in his own favor (Pant 1964).
People bright enough to profit from activities as arcane as international currency speculation might find ways to avoid a Tobin tax.
Lee also said the GIC does not engage in currency speculation.
The charity War on Want is asking Gordon Brown to introduce a tax on currency speculation to help people in developing countries.
BI could be financed in a variety of ways, including a "Tobin tax" on currency speculation or even a very small "bit tax" on all electronic transactions.
A description of the history of the industry would include the following terms: privatization, enclosure, displacement, exploration, modernization, fertilization, crop rotation, incorporation, standardization, selective breeding, environmental protection, irrigation, soil testing, hybridization, consolidation, scientific management, genetic engineering, globalization, computerization, commodity trading, satellite mapping and weather forecasting, bio-engineered crops, electronic stockyards, and currency speculation. Is it any wonder that traditional family farms are an endangered species?