Talk:Speculation

Dark side questions

The first paragraph of the section Some perverse effects reads:

Speculation does have its dark side though. It is said to divert resources away from those who are adding value to the economy. In the earlier example, producers and consumers are actually generating value for the economy and ideally, all the benefits from the transaction should accrue to both or either of them. However, once speculators join the transaction, a component of the gain generated by the transaction will accrue to the speculator, despite not generating any value for the economy in return. The investor Warren Buffett is a vocal critic of speculation. A more explicit example is stock trade. Speculators gain (supposing they are successful) at the expense of investors who hold the stock for dividend and capital gain.

This is mostly or entirely unsubstantiated here. Who says it diverts resources? We should avoid phrases such as "it is said...". Which is the "earlier example"? How does a consumer "generate value", surely only producers can do this? If a speculator removes value when he gains on a transaction then surely he must provide value when he loses? And, of course, often (s)he will lose. If the producer chooses to sell to a speculator who are we to tell the producer he is not getting good value? What has the opinion of one man to do with this? What is "stock trade" and why is it a more "explicit example"? How do those holding for "dividend and capital gain" lose out to speculators?

Paul Beardsell 08:32, 21 Jan 2005 (UTC)

I agree with you, this "diversion of resources" is pure mental ...speculation, and popular folklore, nothing substantiated. But how to fight prejudiced opinions? --Pgreenfinch 09:25, 21 Jan 2005 (UTC)

How? Write an article in an encyclopedia! I think I will cull the para quoted above from the article pending someone providing decent references. What say you? Paul Beardsell 23:20, 21 Jan 2005 (UTC)

Do it! GT

Speculation

I came here for information about speculation as in "Reasoning based on inconclusive evidence; conjecture or supposition", not about speculation as it applies to the finance world. How can we split this page into a separate page? mmj 08:42, 10 Feb 2005 (UTC)

I personally think that speculation in finance or not is the same thing, you are "Speculating" about something with no evidence that your statement will be proven to be true. So I follow your suggestion but I would keep it all in the same page, explaining about the concept of "Speculation" in the other cases than finance as well."Speculation" is not a finance thing of it's own and does not imply anything different than other cases when one is "speculating" about a subject. I would just keep the additional information about financial speculation as being a form of speculation that is legally accepted and how it's used. Because for example "speculation" any other area like in judicial courts is rejected and cannot be used to reach any conclusions.--Slamcool 13:57, 5 November 2007 (UTC)[reply]

Scare quotes

Why is "true worth" in scare quotes? - FrancisTyers 05:53, 14 February 2006 (UTC)[reply]

Unsourced statements

The following are unsourced: "Virtually all long term investors, even those who buy and hold for decades, may be classified as speculators" "A degree of speculation exists in every financial decision". They seem to use a definition of speculation that may not be universally accepted. Shawnc 10:24, 25 April 2006 (UTC)[reply]

Seems to me that to speculate is to bet on the future. --Pgreenfinch 13:38, 25 April 2006 (UTC)[reply]

I (who accept the responsibility for most of that paragraph) agree with both points of view. The dictionary definition of speculator suggests "higher than average" risk is required. However, I was making the (hopefully) inarguable point that it is merely a matter of degree. All financial transactions with an uncertain outcome have a degree of speculation in them. To be pedantic, probably all stock investing is "higher than average risk" when you compare it to investment in bonds, savings, etc., which would make all stock investors speculators according to the dictionary definition. Should we demand that there is a clear dividing line between speculators and "normal investors", or should we emphasise that there is a continuum of speculation to different degrees.

Another related point is the the factor of time. A short term speculator may risk a smaller fraction of his capital on each transaction than many people who invest long term, but the transactions are far more frequent. Is this "higher than average risk" or is it just more frequent risk taking?

I should mention that I am a speculator, by anyone's definition. Elroch 23:57, 25 April 2006 (UTC)[reply]

On further reflection, I'm half inclined to say it would be less confusing if the article concentrated only on speculation of the more extreme types. However, this would leave rather little of the current text. For example, where it discusses bubbles and crashes, it is widely accepted that these are to a large extent driven by the behaviour of non-professionals enthusiastically joining in a bull market, and getting out of their positions when it ends - extreme speculators don't create the bubble or cause crashes directly (there is some disagreement about this in the case of crashes, but my opinion is that they do little more than shake a tree with ripe apples on it in most cases). The article cornering the market explains what can happen when anyone tries to control the market, rather than taking advantage of what it is doing. Really, I suppose the best thing to improve the article would be to discuss the activities of high profile speculators, as that is of widest interest and clearly on topic. Elroch 16:31, 26 April 2006 (UTC)[reply]

Several of the greatest investors in the U.S., including Warren Buffett, emphasize the difference between speculation and investing.

Actually, I arrived at this article because my link to "land speculation" took me here. I do not feel that this article has much to do with land speculation. Unfortunately, Wikipedia does not appear to have an article on land speculation or land speculators, particularly as they relate to the 19th Century. Pooua 09:33, 26 May 2007 (UTC)[reply]

Classifying "virtually all" investors as speculators are silly, because if you define the word that widely, it has no meaning whatsoever. If buying *anything* for use in the future is speculation, what, then, is the difference to investing ? This conflicts with normal meaning of the word. I propose instead that *speculation* is investment-activity that intends to make a profit from short-term fluctuations in the market, as opposed to by long-term underlying profits. If I buy a stock, expecting the company will turn a profit and deliver a dividend for the next 20 years, that's investment. If I try to outguess the market and buy a stock with the intention of holding it a few hours and selling at profit, that's speculation. Yes, the two are overlapping, there'll always be grey areas. But that's not the same as claiming the two are the same. "tall" and "short" aren't the same just because some people have a heigth that is hard to classify into one of the two. --Eivind Kjørstad 13:03, 24 August 2007 (UTC)[reply]

Needed

Sections or new pages are desired in terms of Land speculation or Land speculators or Real estate speculation in terms of public policy, pushes to sprawl and community interests. Rauterkus 11:59, 28 October 2006 (UTC)[reply]