speculation
noun
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Definition of speculation
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Synonyms & Antonyms for speculation
Synonyms
adventure, chance, crapshoot, enterprise, flier (also flyer), flutter [chiefly British], gamble, throw, venture
Antonyms
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Examples of speculation in a Sentence
Recent Examples on the Web
The statement did not mention details of where Mugabe would be buried, fueling speculation about his final resting place. — Mark Chingono And Bukola Adebayo, CNN, "Family members leave Zimbabwe to bring Mugabe's body home from Singapore," 9 Sep. 2019 The choice of Gass over Chawla prompted immediate speculation about Chawla's future. — Rick Romell, Milwaukee Journal Sentinel, "Kohl's No. 2 executive Sona Chawla, who had been in running for top spot, will leave the company," 6 Sep. 2019 Obviously, there's been a lot of speculation about the foot injury, the helmet. — Christopher Bumbaca, USA TODAY, "Antonio Brown agent Drew Rosenhaus: '(Brown) wants to have a good relationship' with Raiders," 5 Sep. 2019 Kennedy's comment comes amid rampant speculation about a bid against Markey, who has represented Massachusetts in Congress for more than 30 years. — Ben Kamisar, NBC News, "Joe Kennedy says he's considering primary bid against Ed Markey," 26 Aug. 2019 Ginsburg is one of the oldest justices ever to serve on the Supreme Court, and her health is a constant matter of concern and speculation for both liberals and conservatives. — Robert Barnes, BostonGlobe.com, "Ruth Bader Ginsburg treated for tumor on her pancreas," 23 Aug. 2019 Despite or because of years of speculation about when the second female justice appointed to the court will finally retire, Ginsburg is determined to work for as long as possible. — Ephrat Livni, Quartz, "Supreme Court justice Ruth Bader Ginsburg spent summer vacation in radiation therapy," 23 Aug. 2019 Cyrus’ latest single, also spurred speculation for its indirect nods to Hemsworth and their on-again-off-again history. — Christi Carras, Los Angeles Times, "Miley Cyrus breaks silence on Liam Hemsworth split: ‘I am not a liar’," 22 Aug. 2019 No one knows Gossip Bitch’s identity, but everyone in this exclusive circle relies on her updates about the neighborhood’s noise and trash issues—and, now, for speculation about the cause of Serena’s long absence. — Wendi Aarons Kj Dell’antonia, The New Yorker, "Girl, You’re a Middle-Aged Woman Now," 21 Aug. 2019These example sentences are selected automatically from various online news sources to reflect current usage of the word 'speculation.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
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More Definitions for speculation
speculation
nounFinancial Definition of speculation
How It Works
Technically, anyone who buys or shorts a security with the expectation of a favorable price change is a speculator. For example, if a speculator believes XYZ Company stock is overpriced, they may short the stock, wait for the price to fall, and make a profit. It's possible to speculate on virtually every security, though speculation is especially concentrated in the commodities, futures, and derivatives markets.
But to really understand speculation, one must understand how it differs from hedging. Let's consider an example: let's assume part of your investment portfolio includes shares of Company XYZ, which manufactures autos. Because the auto industry is cyclical, Company XYZ shares will probably decline if the economy starts to deteriorate.
If you want to protect this investment -- that is, you want to hedge your investment -- one way to do that is to buy defensive stocks. You may choose "noncyclicals," or companies that sell basic necessities like toothpaste or toilet paper. During economic slumps, these stocks tend to hold or increase their value, which could offset the loss in value of the XYZ shares.
A speculator wouldn't follow this strategy. If a speculator purchased food-company stocks, he would do so because he simply believes the stock is going to increase.
Speculation can increase short-term volatility (and thus, risk). It can inflate prices and lead to bubbles, as was the case in the 2005-2006 real estate market in the United States. Speculators who were betting that home prices would continue to increase purchased houses (often using leverage) intending to "flip" them for a profit. This increased the demand for housing, which raised prices further, eventually taking them beyond the "true value" of the real estate in many markets. The frenzied selling that ensued is typical for speculative markets.
Why It Matters
Some people may see speculators as dangerous gamblers, but speculators actually provide much-needed liquidity to markets and are thus a vital component of market efficiency. Without them, many commodities markets, for example, would virtually grind to a halt because the only participants would be farmers and food companies. With fewer participants in a market, bid-ask spreads would widen and it would be much harder for buyers and sellers to find each other. The resulting illiquidity would dramatically increase the risk in that market.
Source: Investing Answers
speculation
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English Language Learners Definition of speculation
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Kids Definition of speculation
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speculation
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