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
Agree with it or not, this is the just kind of challenging speculation that science fiction has always been about, and which makes the genre valuable as such. — Andrew Liptak, The Verge, "An artist on creating the retro art for a new edition of Robert Heinlein’s Starship Troopers," 9 Dec. 2018 Later, Baldwin was reportedly crying at a restaurant, sparking speculation of trouble between the young golden couple. — Michelle Ruiz, Vogue, "Now We Know Why Justin Bieber Was Crying in Public," 9 Aug. 2018 At the time, there was already widespread speculation that the Guccifer 2.0 account might be connected to the Russian government. — Rosalind S. Helderman And Manuel Roig-franzia, chicagotribune.com, "Charges against Russian officers intensify spotlight on Trump adviser Stone," 13 July 2018 Velasquez muted any speculation that De Los Santos could nudge him from the rotation by flashing a mid-90s fastball and mixing in his secondary pitches in his first start since getting hit on the forearm by a line drive June 30. — Scott Lauber, Philly.com, "Phillies' Maikel Franco making a play to stay | Extra Innings," 12 July 2018 The hospital has acknowledged a higher death rate around that time, raising speculation that the poisoning may have been systematic and more widespread. — Washington Post, "Japan police search home of nurse in hospital poison deaths," 12 July 2018 DaSilva's account is the first from a Republican and could help quell speculation among some Hill supporters that the accusations are part of a Democratic effort to undermine a conservative statewide officeholder. — Ryan Martin, Indianapolis Star, "GOP staffer speaks on groping allegations against Attorney General Curtis Hill," 12 July 2018 Since his election, however, Lopez Obrador has gone out of his way to strike a conciliatory tone and discourage speculation that his government would act in a precipitous manner. — Patrick J. Mcdonnell, latimes.com, "Mexico's Lopez Obrador taps longtime loyalist as nominee for top diplomat and invites Trump to inauguration," 6 July 2018 On Thursday, the third straight day of relatively little rain at the cave complex raised speculation that Thai officials were considering a hurried evacuation attempt. — New York Times, BostonGlobe.com, "Good weather, tough circumstances in Thailand cave rescue," 5 July 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.
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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
See the full definition for speculation in the English Language Learners Dictionary
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speculation
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Legal Definition of speculation
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