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 That prompted speculation that Barr was dropping the case at the request of the president, a claim Barr denies. James Brooks, Anchorage Daily News, "Alaska’s attorney general joins others in asking judge to stop prosecution of Michael Flynn," 20 May 2020 Whitmer has been asked repeatedly about vice presidential speculation in the last month but has typically only responded that her energy is dedicated to handling the current crisis. Caitlin Conant, CBS News, "2020 Daily Trail Markers: Biden's search for a VP is likely underway," 19 May 2020 Bob Chapek, who runs the theme-park division, wasprompting speculation at the time over whether Mayer would seek to leave the conglomerate. Steven Zeitchik, Washington Post, "In surprise move, a top Disney executive will run TikTok," 18 May 2020 As speculation intensifies over possible Israeli plans to annex portions of the West Bank, the Palestinian movement faces its greatest crisis since Israel became a state. Walter Russell Mead, WSJ, "The Palestinians Need to Make Bold Moves," 18 May 2020 But speculation has also focused on a nearby lab that studies pathogens similar to the one that causes COVID-19. Paul Cobler, Dallas News, "Texas GOP Congressmen urge sanctions against Chinese officials over coronavirus response," 18 May 2020 Last May, the announcement that the fab four would team up to support the project to help those experiencing mental health struggles came after months of tabloid speculation that Harry, William and their wives were feuding. Hannah Yasharoff, USA TODAY, "Prince William, Duchess Kate celebrate 'trailblazers' helping with mental health amid coronavirus," 17 May 2020 The twin announcements raised speculation that T.S.M.C. might have obtained some kind of assurance that at least a portion of its sales to Huawei would be exempted from the new ban. Ana Swanson, New York Times, "U.S. Delivers Another Blow to Huawei With New Tech Restrictions," 15 May 2020 The mood in the banking industry is further darkened by speculation that the Federal Reserve could follow in the footsteps of Europe and Japan by dropping interest rates below zero. Matt Egan, CNN, "Banks are in trouble, but this solution would make Elizabeth Warren's head explode," 15 May 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

23 May 2020

Cite this Entry

“Speculation.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/speculation. Accessed 2 Jun. 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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