Speculation

Extracted Attributes

• Focus

  Price movements over fundamental value

• Definition

  Purchase of an asset with the hope of short-term value increase or short sales for a decline in value

• Common Markets

  Stocks, bonds, commodity futures, currencies, cryptocurrency, fine art, collectibles, real estate, financial derivatives

• Role in Markets

  One of four primary roles in financial markets

• Key Characteristic

  Higher volatility, frequent price fluctuations

• Associated Phenomenon

  Economic bubbles

• Distinction from Investing

  Profiting from short-term fluctuations vs. long-term ownership/appreciation

• Historical Treatment (Soviet Union)

  Regarded as a criminal offense (Article 154 of Penal Code of USSR), punished with fines, imprisonment, confiscation, and/or corrective labor

Timeline

• General Motors pioneers Consumer Credit, shifting American aversion to debt and enabling a massive expansion of leverage for speculators. (Source: related_documents)

  1919

• Period leading up to the Stock Market Crash of 1929, characterized by massive expansion of leverage, with banks like National City lending speculators up to $10 for every $1 invested, fueled by a lack of regulation and new technology like Radio. (Source: related_documents)

  1920-1929

• The Stock Market Crash of 1929 occurs, triggered by a speculative bubble, ultimately leading to the Great Depression. (Source: related_documents)

  1929-10-29

• Franklin D. Roosevelt is elected President, implementing the New Deal in response to the Great Depression, which was triggered by the 1929 crash. (Source: related_documents)

  1933-03-04

• Modern discussions draw parallels between past speculative manias and current massive investments in AI (Artificial Intelligence), questioning if it constitutes a similar monetary bubble and exploring where hidden leverage might exist today, such as in the private credit market. (Source: related_documents)

  2020-2025

Speculation

In finance, speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that that asset will become more valuable in a brief amount of time. The term can also refer to short sales, in which the speculator hopes for a decline in value. Many speculators pay little attention to the fundamental value of a security and instead focus purely on price movements. In principle, speculation can involve any tradable good or financial instrument. Speculators are particularly common in the markets for stocks, bonds, commodity futures, currencies, cryptocurrency, fine art, collectibles, real estate, and financial derivatives. Speculators play one of the four primary roles in financial markets, along with: hedgers, who engage in transactions to offset some other pre-existing risk arbitrageurs, who seek to profit from situations where fungible instruments trade at different prices in different market-segments investors, who seek profit through long-term ownership of an instrument's underlying attributes

Web Search Results

• Speculation - Wikipedia

  In finance, speculation is the purchase of an asset (a commodity, goods "Good (economics)"), or real estate) with the hope that that asset will become more valuable in a brief amount of time. The term can also refer to short sales, in which the speculator hopes for a decline in value. [...] Speculation is often associated with economic bubbles. A bubble occurs when the price for an asset exceeds its intrinsic value by a significant margin, although not all bubbles occur due to speculation. Speculative bubbles are characterized by rapid market expansion driven by word-of-mouth feedback loops, as initial rises in asset price attract new buyers and generate further inflation. The growth of the bubble is followed by a precipitous collapse fueled by the same phenomenon. Speculative [...] The Soviet Union regarded any form of private trade with the intent of gaining profit as speculation (Russian: спекуляция) and a criminal offense and punished speculators accordingly with fines, imprisonment, confiscation and/or corrective labor. Speculation was specifically defined in article 154 of the Penal Code of the USSR. ### Regulations [edit]

• What is Speculation? - Robinhood

  Speculation is the act of making calculated investments in high-risk opportunities with the chance of a big payoff. A speculative investment refers to the investment itself. These investments carry a particularly high level of risk, but that also opens the door for a substantial profit. Speculative investments tend to have higher volatility, meaning they experience frequent price fluctuations. [...] Speculation is a risky investment strategy for many investors because it involves attempting to predict what the market will do in the future. That said, speculation has also helped to make some people wealthy. Billionaire philanthropist George Soros is one well-known example — He once famously made $1B in one trade by betting against the British pound. > Speculation is like investing all of your money into a plot of land because you think you’ll find gold… [...] What is Speculation? # What is Speculation? Robinhood Learn Democratize Finance For All. Speculation is a form of active investing that involves making and acting on market predictions — It comes with high risk, but also the chance for substantial gains on short-term investments. ## 🤔 Understanding speculation

• Learn how Speculation Affects Different Types of Markets

  Speculation is the buying of an asset or financial instrument with the hope that the price of the asset or financial instrument will increase in the future. Speculative investors tend to make decisions more often based on technical analysis of market price action rather than on fundamental analysis of an asset or security. They also tend to be more active market traders – often seeking to profit from short-term price fluctuations – as opposed to being “buy and hold” investors. [...] #### 1. Unreasonable prices Speculation can sometimes push prices beyond reasonable levels, to excessively high or low valuations that do not accurately reflect an asset or security’s true intrinsic value. It means that speculation may lead to price fluctuations that, even though they are merely temporary, can have a long-term impact on the fortunes and stability of a company, an industry, or even a whole economy.

• Speculation - What it Means in Trading, Types, Risks & Key Strategies

  Speculation or speculative trading is where traders look to earn profits from market price movements, upwards or downwards. It is different from investment, which looks deeply at more fundamental factors and values. So, the difference between speculation and investment is that the latter involves buying assets in anticipation of generating appreciation/returns over a certain period, while the former is more about profiting from short-term fluctuations in the market.

• What is Speculation and How Does it Work? - AvaTrade

  The word speculation can have several meanings, but when it is used in the context of the financial markets it has a very clear meaning. In the case of financial markets and trading, speculation is the act of conducting a trade or market transaction that has both the potential for a substantial profit and the possibility of a severe loss. In a speculative trade like this the trader believes that the potential for gain is more than enough to offset the risk of loss. [...] Example: A stock investor buys Apple (AAPL) shares based on strong revenue growth and innovation with a plan to hold the shares for several years. ### 2. Speculation – Taking Advantage of Price Movements Definition: Speculation involves making high-risk trades with the aim of profiting from short- or medium-term price fluctuations, rather than long-term value. Key Characteristics: [...] ### Final Thoughts Speculation differs from gambling because it involves informed decision-making, risk management and market analysis. However, speculation is riskier than traditional investing due to its short-term nature and reliance on price volatility. Want to speculate with a risk-managed approach? Open an AvaTrade account and explore market opportunities with professional trading tools. Register Now Or Try Free Demo ## Different Types of Speculation and Their Pros & Cons

• Instance Of

  Q131436

In finance, speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable shortly. (It can also refer to short sales in which the speculator hopes for a decline in value.) Many speculators pay little attention to the fundamental value of a security and instead focus purely on price movements. In principle, speculation can involve any tradable good or financial instrument. Speculators are particularly common in the markets for stocks, bonds, commodity futures, currencies, fine art, collectibles, real estate, and derivatives. Speculators play one of four primary roles in financial markets, along with hedgers, who engage in transactions to offset some other pre-existing risk, arbitrageus who seek to profit from situations where fungible instruments trade at different prices in different market segments, and investors who seek profit through long-term ownership of an instrument's underlying attributes.