|
( Speculation)
Collective investment schemes
Credit Unions
Insurance companies
Investment banks
Pension funds
Prime Brokers
Trusts
Popular convention, and especially satire, sometimes portray speculators comically as speculating in pork bellies (for which there is an active commercial market — as well as a futures market in which real speculators coexist alongside the dominant commercial hedgers active there) and often as "losing their shirts" or making a fortune on small market changes. While speculation does exist in many relatively small commercial markets (as measured by aggregate market value) such as cattle, hogs, pork bellies, orange juice, and lumber, just as it does in the massively more important global markets such as foreign exchange and petroleum, for most such markets, large and small, such risk-transfer instruments as futures contracts and other derivatives are available both to commercial as well as to speculative interests to establish a large position with only a small deposit of capital (i.e., with substantial leverage). That leverage subjects the one without a counterbalancing commercial position (i.e., the speculator) to the risk of an enormous loss in proportion to one's capital on deposit, in return for the sometimes speculative opportunity for an equally enormous reward in response to a fairly small move in the underlying market. By some definitions, most long-term investors, even those who buy and hold for decades, may be classified as speculators,[citation needed] excepting only the rare few who are not primarily motivated by eventually selling at a good profit. Some dedicated speculators are distinguished by shorter holding times, the use of leverage, by being willing to take short positions as well as long positions (in markets where the distinction can be reasonably made). A degree of speculation exists in a wide range of financial decisions, from the purchase of a house to a bet on a horse; this is what modern market economists call "ubiquitous speculation."[citation needed] In Security Analysis, Benjamin Graham gave a definition of speculation in relation to investment "An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative."[citation needed]
|
Speculation Subcategories
Speculation Articles
|
|
