speculation
noun
\
Definition of speculation
: an act or instance of speculating: such as
a : assumption of unusual business risk in hopes of obtaining commensurate gain
b : a transaction involving such speculation
Keep scrolling for more
Synonyms & Antonyms for speculation
Synonyms
adventure, chance, crapshoot, enterprise, flier (also flyer), flutter [chiefly British], gamble, throw, venture
Antonyms
Visit the Thesaurus for More
Examples of speculation in a Sentence
Recent Examples on the Web
The birth of Meghan Markle and Prince Harry's first child is still many cold, winter months away, but that hasn't stopped speculation on both sides of the pond about the logistics of Baby Sussex's arrival this spring. — Abby Gardner, Glamour, "How Meghan Markle's Birth Plan Might Differ From Kate Middleton's and Princess Diana's," 30 Nov. 2018 After months of speculation, Prince Harry and Meghan Markle finally announced their engagement on November 27, 2017. — Morgan Evans, Town & Country, "A Definitive History of Prince Harry and Meghan Markle's Royal Relationship," 15 Oct. 2018 For example, ETFs have popularized speculation on commodity futures and on derivatives tied to stock-market volatility, and some employ leverage to double or even triple gains and losses. — Asjylyn Loder, WSJ, "Bitcoin ETFs Keep Trying, Despite Regulators’ Rejections," 23 Sep. 2018 Regulators were scrambling to find out whether the information—and the (winking?) share price—were true, after months of speculation on whether or not the company could even hit its sales targets. — Bridget Read, Vogue, "What’s Going On With Azealia Banks, Grimes, and Elon Musk?," 14 Aug. 2018 But news of the party’s kickoff, announced by the quiet, businesslike Shahbaz Sharif, was swept aside by blanket media coverage and fervid speculation on the court ruling and its probable impact on the Sharif family in the coming election. — Pamela Constable, Washington Post, "Pakistan court convicts former prime minister Nawaz Sharif in corruption case," 6 July 2018 But the tweet ignited frenzied speculation on social media that James intended to join the Lakers. — Nathan Fenno, latimes.com, "LeBron James dropped hints for a year that he would join Lakers," 3 July 2018 Which is why the jacket became a fresh token for speculation on the meaning of Melania. — Molly Ball, Time, "Melania Trump Is Redefining One of the World’s Weirdest Jobs," 28 June 2018 Asked on Wednesday how to interpret another visit to New Hampshire though, Moulton, 39, quipped to reporters that the media does a good enough job offering speculation on its own about his ambitions. — James Pindell, BostonGlobe.com, "Seth Moulton is returning to New Hampshire. How much should we read into that?," 28 June 2018These 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.
Keep scrolling for more
Keep scrolling for more
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
noun
English Language Learners Definition of speculation
: ideas or guesses about something that is not known
: activity in which someone buys and sells things (such as stocks or pieces of property) in the hope of making a large profit but with the risk of a large loss
See the full definition for speculation in the English Language Learners Dictionary
speculation
noun
\
Kids Definition of speculation
1 : guess entry 2
2 : the taking of a big risk in business in hopes of making a big profit
Keep scrolling for more
speculation
noun
\
Legal Definition of speculation
: an act or instance of speculating: as
a : assumption of unusual business risk in hopes of obtaining commensurate gain
b : a transaction involving such speculation
Keep scrolling for more
Comments on speculation
What made you want to look up speculation? Please tell us where you read or heard it (including the quote, if possible).
Test Your Vocabulary
Late Autumn 2018 Words of the Day Quiz
-
- Which is a synonym of yahoo?
Can you spell these 10 commonly misspelled words?
TAKE THE QUIZ
Test Your Knowledge - and learn some interesting things along the way.
TAKE THE QUIZ
Share speculation
Resources for speculation