Speculation

Speculation involves the buying, holding, and selling of stocks, commodities, futures contract, currencies, collectibles, real estate, or any valuable thing to profit from fluctuations in its price as opposed to buying it for use or for income ( via dividends, rent etc). Speculation or agiotage represents one of three market roles in western financial markets, distinct from hedging and arbitrage.

Speculation areas

Convention - and especially satire - sometimes depicts speculators comically as speculating in pork bellies (in which a real market and real speculators exist) and often "losing their shirts" or making a fortune upon small market changes. Speculation exists in many such commodities but, if measured by value, the most important markets deal in financial futures contracts and other derivatives which involve leverage that can transform a small market movement into a huge gain or loss.

Related Topics:
Pork bellies - Derivatives - Leverage

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