speculation

noun
spec·​u·​la·​tion | \ ˌspe-kyə-ˈlā-shən How to pronounce speculation (audio) \

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

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Synonyms & Antonyms for speculation

Synonyms

Antonyms

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Examples of speculation in a Sentence

He dismissed their theories as mere speculation. The book is just a lot of idle speculation about the future. Her speculations leave many questions unanswered. He lost everything in foolish land speculation.
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Recent Examples on the Web The two have been frequently spotted hanging out together in public, fueling speculation of a romance. Lauren Rearick, Teen Vogue, "Zendaya and Jacob Elordi Have Possibly Been Dating for "Months"," 6 Feb. 2020 The new move notably keeps Merck’s animal health division, which has been a frequent source of spin-off speculation over the years. Matthew Herper, STAT, "Merck to spin off new $6.5 billion firm focused on women’s health, older drugs," 5 Feb. 2020 The delay fueled speculation and concerns among campaigns that the delay was the result of foul play or inaccurate counting. Emily Larsen, Washington Examiner, "'Sloppiest train wreck in history': Trump campaign exults in Democrats' Iowa caucus fiasco," 4 Feb. 2020 The singer was just seen getting close with her frequent collaborator, Mikey Foster, after months of speculation that the pair is dating. Carolyn Twersky, Seventeen, "Ariana Grande and Rumored Bae Mikey Foster Were Just Seen Walking Arm-in-Arm at Disneyland," 4 Feb. 2020 The proposals have fueled speculation that Mr. Putin could remain in control and guide policy from the council, and were quickly followed by the resignation of the government and the appointment of a new premier and cabinet. Thomas Grove, WSJ, "Russia’s Parliament Passes Putin’s Constitutional Plans on First Reading," 23 Jan. 2020 Shortly after that, Future posted a video of himself riding in a car with Lori, which further fueled the speculation. Kayla Keegan, Good Housekeeping, "Lori Harvey Shares Rare PDA-Filled Instagram of Her and Future as Dating Rumors Spread," 15 Jan. 2020 But despite fueling speculation of a bid with numerous visits to Kansas, a source told Fox News this week that Pompeo told Senate Majority Leader Mitch McConnell, R-Ky. Fox News, "Pompeo's decision not to run in Kansas Senate race boosts immigration hawk Kris Kobach," 12 Jan. 2020 Aiko posted photos of the two together, further fueling speculation of their comeback. Diane J. Cho, PEOPLE.com, "Celeb Couples Who Celebrated Their Very First New Year's Eves Together This Year," 2 Jan. 2020

These 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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First Known Use of speculation

14th century, in the meaning defined above

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Time Traveler for speculation

Time Traveler

The first known use of speculation was in the 14th century

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Statistics for speculation

Last Updated

18 Feb 2020

Cite this Entry

“Speculation.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/speculation. Accessed 29 Feb. 2020.

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More Definitions for speculation

speculation

noun

Financial Definition of speculation

What It Is

Speculation is a method of short-term investing whereby traders essentially bet on the direction an asset's price will move.

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
How to pronounce speculation (audio)

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

speculation

noun
spec·​u·​la·​tion | \ ˌspe-kyə-ˈlā-shən How to pronounce speculation (audio) \

Kids Definition of speculation

2 : the taking of a big risk in business in hopes of making a big profit

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speculation

noun
spec·​u·​la·​tion | \ ˌspe-kyə-ˈlā-shən How to pronounce speculation (audio) \

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

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Comments on speculation

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