Speculation

In <a href="/facts/Finance/fLh1GgN8">finance</a>, speculation is the purchase of an asset (a <a href="/facts/Commodity/zD0Em9v7">commodity</a>, <a href="/facts/Good_(economics)/AtK6gQh2">goods</a>, or <a href="/facts/Real_estate/fngFAqrR">real estate</a>) with the hope that it will become more valuable in a brief amount of time. It can also refer to <a href="/facts/Short_sales/QMDa54dz">short sales</a> in which the speculator hopes for a decline in value.
Many speculators pay little attention to the <a href="/facts/Fundamental_value/kwdcWYfB">fundamental value</a> of a security and instead focus purely on price movements. In principle, speculation can involve any tradable good or <a href="/facts/Financial_instrument/2d93t6Ya">financial instrument</a>. Speculators are particularly common in the markets for <a href="/facts/Stock/Qa912YwX">stocks</a>, <a href="/facts/Bond_(finance)/qlmpLj0k">bonds</a>, <a href="/facts/Commodity_futures/4SD3dKty">commodity futures</a>, <a href="/facts/Currency/g5GPGfTe">currencies</a>, <a href="/facts/Cryptocurrency/Rg6JAS8y">cryptocurrency</a>, <a href="/facts/Fine_art/eCVxehXE">fine art</a>, <a href="/facts/Collectible/SxRuAwUI">collectibles</a>, <a href="/facts/Real_estate/fngFAqrR">real estate</a>, and <a href="/facts/Derivative_(finance)/jx4CbakW">financial derivatives</a>.
Speculators play one of four primary roles in financial markets, along with <a href="/facts/Hedge_(finance)/PKVBgUHb">hedgers</a>, who engage in transactions to offset some other pre-existing risk, <a href="/facts/Arbitrage/sFFMI3nk">arbitrageurs</a> who seek to profit from situations where <a href="/facts/Fungibility/24LzNAE0">fungible</a> instruments trade at different prices in different market segments, and <a href="/facts/Investor/JEVPRsyV">investors</a> who seek profit through long-term ownership of an instrument's underlying attributes.

Speculation open-in-new

Speculation