Deliberate assumption of above average (but analyzed, measured, and usually hedged) short-term risk of financial loss, in expectation of above average gain from an anticipated change in prices. Organized speculation (as conducted through commodity and stock exchanges) adds capital and liquidity to financial markets, and helps dampen wild fluctuations in prices in normal times. In times of speculative hysteria or economic/political crises, however, speculation exacerbates price swings and may swamp usual trading activity. In terms of degree of risk assumed, speculation (short-term acquisition of assets) falls between investment (long-term acquisition of assets for income and/or capital appreciation) and gambling (wagering on random outcomes without acquisition of assets).
See also arbitrage.
Use 'speculation' in a Sentence
Some times you don't have all of the important information and when you have to make your final decision it really is just pure speculation.
In terms of the monetary gain of the sales of stocks, it was a huge speculation on the part of the buyer which would return the most money.
Mr. Smith made a very positive speculation on xyz companies stock, which came as quite a surprise to xyz and lead to their stock price closing higher than it ever has.
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