Speculation

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Dictionary Says

Definition of 'Speculation'

The process of selecting investments with higher risk in order to profit from an anticipated price movement.
Investopedia Says

Investopedia explains 'Speculation'

Speculation should not be considered purely a form of gambling, as speculators do make an informed decision before choosing to acquire the additional risks. Additionally, speculation cannot be categorized as a traditional investment because the acquired risk is higher than average.

More sophisticated investors will also use a hedging strategy in combination with their speculative investment in order to limit potential losses.

Related Definitions

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  • Speculator

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    • Take A Bath

      A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative position. Investors whose shares have declined significantly are ...
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    • Take A Flier

      The slang term for a decision to invest in highly speculative investments.
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    • Venture Capital

      Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have ...
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    • Speculative Capital

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    • Spread Betting

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    • Speculative Flow

      The movement of speculative capital between different assets or areas of the economy. Speculative flow can increase the value of an asset due to increased investor demand.
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    • High Flier

      A stock that has seen its share price - and subsequently its valuation - rise to high multiples on metrics such as current earnings and current sales. Usually, the rise will happen ...
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