Speculation >From Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Speculation Speculation (in a financial context) is the acquisition of a risky asset on the assumption that it will be more valuable or less risky in the future. It can be contrasted with a pure business investment, for which the investor is compensated for the use of her capital and the risk of its loss. A speculative asset typically increases the risk of a portfolio. Speculators rely on an asset appreciating in value due to changing tastes, economic conditions or perceptions. In reality, the returns on most financial investments represent some elements of reward for accurate speculation, and some of compensation for the use of capital and assumption of risk. Notoriously hard to identify, in his influential financial work, Security Analysis, Benjamin Graham discusses speculation. "An investment operation is one which, upon thorough analysis promises safety of principal and and an adequate return. Operations not meeting these requirements are speculative."[1] Financial speculation can involve the buying, holding, selling, and short-selling of stocks, bonds, commodities, currencies, collectibles, real estate, derivatives, or any valuable financial instrument to profit from fluctuations in its price, and is generally contrasted with buying it for use or for income via methods such as dividends or interest. Speculation represents one of four theoretically separate but, in practice, overlapping market roles in Western financial markets, distinct from hedging, long- or short-term investing, and arbitrage. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
