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 ?
Tardif speculates that Canadian companies are discouraged by the cost of exporting to Europe, as well as by differences in product standards and tastes.
However, Levine speculates that even a bogus program can succeed by simply getting people to pay attention.
Romanio speculates that certain anticancer drugs, such as those attracted to the lipids that make up exosome membranes, are most susceptible to removal by the vesicles.
Researchers have identified gene mutations that produce the inky coats in house cats and jaguars, and the scientists speculate that some of these mutations protected the black felines from an epidemic long ago.
Various farming practices developed slowly there and then spread into Europe as a "package," he speculates.
Another ant biologist, Neil Tsutsui of the University of California, Davis, speculates that a three-lane trail provides better defense for the booty lane than two lanes would.
If stress hormones are chronically altered, however, sleep deprivation may have adverse health effects, Meerlo speculates.
They speculate that competition for food was fiercer in the earlier period.
Eddy speculates that scientists may have searched in vain for genes causing some diseases because they considered only protein-coding genes when an overlooked small RNA gene is the culprit.
Many paleontologists speculate that modern-day birds emerged from Coelurosaur rootstock, an idea bolstered by recent finds in China of early Cretaceous fossils of what were apparently feathered Coelurosaurs (SN: 4/28/01, p.
Moran speculates that detrimental mutations might "cause the whole system to melt down." That doesn't seem to happen, however, since the aphids and their bacteria have been around so long, she points out.
Hazen speculates that billions of years ago, amino acids might have lined up on crystals' terraces.