Speculation

In finance, speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that that asset will become more valuable in a brief amount of time. The term can also refer to short sales, in which the speculator hopes for a decline in value. Speculation often has a pejorative connotation, as the activity is linked to bubbles, economic downturns, and financial crises. Many speculators pay little attention to the fundamental value of a security and instead focus purely on price movements. In principle, speculation can involve any tradable good or financial instrument. Speculators are particularly common in the markets for stocks, bonds, commodity futures, currencies, cryptocurrency, fine art, collectibles, real estate, and financial derivatives. Speculators play one of the four primary roles in financial markets, along with: hedgers, who engage in transactions to offset some other pre-existing risk arbitrageurs, who seek to profit from situations where fungible instruments trade at different prices in different market-segments investors, who seek profit through long-term ownership of an instrument's underlying attributes.