speculation

noun

spec·u·la·tion | \ ˌspe-kyə-ˈlā-shən

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

Synonyms & Antonyms Example Sentences Learn More about speculation

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Synonyms & Antonyms for speculation

Synonyms

adventure, chance, crapshoot, enterprise, flier (also flyer), flutter [chiefly British], gamble, throw, venture

Antonyms

sure thing

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.

Recent Examples on the Web

Sekou Doumbouya: Spoke to an NBA scout who isn't sold on the Top 10 speculation about the 18-year-old playing in France. — Ira Winderman, sun-sentinel.com, "Winderman: NBA draft has to be more than adequate for the Heat | Commentary," 15 June 2019 But there has been widespread speculation that the central leadership has been far more actively involved. — The Economist, "Hong Kong’s leader backs down over controversial extradition bill," 15 June 2019 There has been speculation about Savagnin’s origins before. — Esther Mobley, SFChronicle.com, "Do we drink the same wine that the Romans drank? Not quite," 13 June 2019 At the time, there was speculation about what had become of the 32-year-old married mother of two young children, a girl and a boy. — Kirk Mitchell, The Denver Post, "Colorado Cold Cases: 39 years ago today Beverly England vanished and authorities still are piecing together how she died," 12 June 2019 And, there is the constant speculation Swinney will replace Nick Saban when Alabama’s coach decides to call in quits. — Mark Heim | Mheim@al.com, al.com, "How Dabo Swinney’s ‘I am kinda like Osama bin Dabo (in Alabama)' quote came up months later," 11 June 2019 There wasn’t just speculation that she might be let go by the UFC. — cleveland.com, "Ohio native Jessica Eye looks to shock the world at UFC 238," 7 June 2019 Although the cause of the fire was never determined, there has long been speculation that the fire may have been started by Confederate saboteurs. — Annie Gentile, courant.com, "Historical Society Celebrates Trails Day," 6 June 2019 Her appearance cast doubt on recent media speculation that her brother had sidelined her. — Fox News, "Kim Jong Un’s sister makes first public appearance since failed US summit," 4 June 2019

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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Dictionary Entries near speculation

Statistics for speculation

Last Updated

21 Jun 2019

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Time Traveler for speculation

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

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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

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

spec·u·la·tion | \ ˌspe-kyə-ˈlā-shən