What is speculation in economics. Speculation in a market economy and its difference from investment. Big Law Dictionary
Speculation- Is this good or bad? A Soviet person will tell you that this is terrible. But I will say that speculation is a useful feature to even out prices and make them fair at .
Speculation (in economics) is the receipt of income due to the difference between the prices of buying and selling. In fact, any trading operation can be considered speculative. In the economic literature, there is often an attempt to separate speculation and. However, there is no consensus on this matter.
Speculation in Economics: Examples
1. Making a profit (or loss) from the difference between the purchase and sale prices. It does not assume any actions with the object of speculation. Price differences can occur in different markets at the same time (arbitrage in space) or in the same market at different times (arbitrage in time).
2. Buying and selling raw materials, collectibles, real estate, or other valuables to benefit from changes in their value over time. The purchase of the same objects for personal or industrial purposes, as well as for other profit, for example, through or using decision-making mechanisms in one's favor (interest), as well as operations aimed at price or percentage arbitrage, is not speculation. However, this can only be determined by internal targets, and very often all these transactions are considered speculative.
3.
Buying in closed markets and reselling in open markets scarce goods in conditions of any restrictions on freedom of trade (for example, during war, blockade, embargo or natural disasters) or an objective limitation of the resource (tickets to sports competitions, concerts, performances, etc. .). Such activities are sometimes administratively or criminally punishable, including in countries with a market economy, and therefore are part of the “shadow economy”.
In Soviet Russia and the USSR, speculation, defined as buying and reselling for profit, depending on the volume of transactions, was administratively or criminally punishable.
Speculation in the USSR
In the USSR, speculation was considered a variant of unearned income and was a criminal offense.
According to article 154 "Speculation" of the Criminal Code of the RSFSR of October 27, 1960:
Speculation, that is, buying up and reselling goods or other objects for profit, is punishable by deprivation of liberty for a term of up to two years, with or without confiscation of property, or by corrective labor for a term of up to one year, or by a fine of up to three hundred roubles.
Speculation in the form of fishing or on a large scale is punishable by imprisonment for a term of two to seven years with confiscation of property.
Repeated petty speculation is punishable by corrective labor for a term of up to one year or a fine of up to 200 rubles with confiscation of the items of speculation.
Books about speculation
- Peter Krass — Book of Investment Wisdom. Classic Works of Great Stock Speculators and Legends. - 2002, 504 p. - a good translation by A. Shmatov, - Publisher: IK Analytics. ISBN: 5-93855-029-7. ( The Book of Investing Wisdom— Classic Writings by Great Stock-Pickers and Legends of Wall Street. — Edited by Peter Krass, 2000 - John Wiley & Sons, Inc.). Essay John Moody— Investment and Speculation, p. 97;
- Alexey Tsyganok— From speculation to investment. Stock market for private investors. — Troika Dialog 2008 — 172 p. - ISBN: 978-5-5903838-01-1.
Speculator- an individual or legal entity that makes transactions to profit only from fluctuations in the price of goods. On the stock exchanges, the term "speculator" is used in a sense that is the opposite of a hedger. A speculator is a trader who plays for a fall in the stock price. Such players on the exchange sell contracts, creating a market position, and subsequently do not close this position without making an offset purchase. Other terms for a speculator on the stock exchange: short (English), stock speculator.
The term "speculation" comes from the Latin word speculatio - looking out, stalking. In economics, it is customary to call speculation the extraction of income only due to the difference between the purchase and sale prices. In this case, no actions are performed with the object of speculation. The price difference used to generate income in speculation can exist in the same market at different times (this situation is called “arbitrage in time”) or at the same time in different markets (“arbitrage in space”).
In the literature on economics, one can find a separation of the concepts of "speculator" and "investor". The main criterion is the length of time during which the transaction gives an economic effect.
(or loss) from the difference between the buy and sell prices. It does not assume any actions with the object of speculation. Price differences can occur in different markets at the same time (arbitrage in space) or in the same market at different times (arbitrage in time).
In Soviet Russia and the USSR, speculation, defined as buying and reselling for profit, depending on the volume of transactions, was administratively or criminally punishable.
Speculation in the USSR
Speculation, that is, buying up and reselling goods or other objects for profit, is punishable by deprivation of liberty for a term of up to two years, with or without confiscation of property, or by corrective labor for a term of up to one year, or by a fine of up to three hundred roubles.
Speculation in the form of fishing or on a large scale is punishable by imprisonment for a term of two to seven years with confiscation of property.
Repeated petty speculation is punishable by corrective labor for a term of up to one year or a fine of up to 200 rubles with confiscation of the items of speculation.
see also
Write a review on the article "Speculation"
Links
An excerpt characterizing Speculation
- What a calm, as he describes cute! she said, reading the descriptive part of the letter. And what a soul! Nothing about me… nothing! About some Denisov, but he himself, it’s true, is braver than all of them. He writes nothing about his sufferings. What a heart! How do I recognize him! And how I remembered everyone! Didn't forget anyone. I always, always said, even when he was like this, I always said ...For more than a week they prepared, wrote brillons and wrote letters to Nikolushka from the whole house in a clean copy; under the supervision of the countess and the care of the count, the necessary gizmos and money were collected for the uniform and equipment of the newly promoted officer. Anna Mikhailovna, a practical woman, managed to arrange protection for herself and her son in the army, even for correspondence. She had the opportunity to send her letters to the Grand Duke Konstantin Pavlovich, who commanded the guard. The Rostovs assumed that the Russian guards abroad had a completely definitive address, and that if the letter reached the Grand Duke who commanded the guards, then there was no reason for it not to reach the Pavlograd regiment, which should be nearby; and therefore it was decided to send letters and money through the courier of the Grand Duke to Boris, and Boris was already supposed to deliver them to Nikolushka. Letters were from the old count, from the countess, from Petya, from Vera, from Natasha, from Sonya and, finally, 6,000 money for uniforms and various things that the count sent to his son.
On November 12, the Kutuzov military army, camped near Olmutz, was preparing for the next day for a review of two emperors - Russian and Austrian. The guards, who had just arrived from Russia, spent the night 15 versts from Olmutz and the next day, right at the review, by 10 o'clock in the morning, entered the Olmutz field.
Nikolai Rostov on that day received a note from Boris informing him that the Izmailovsky regiment was spending the night 15 miles short of Olmutz, and that he was waiting for him to hand over a letter and money. Rostov especially needed money now, when, having returned from the campaign, the troops stopped near Olmutz, and well-equipped scribblers and Austrian Jews, offering all sorts of temptations, filled the camp. Pavlohrad residents had feasts after feasts, celebrations of the awards received for the campaign and trips to Olmutz to the newly arrived Karolina Vengerka, who opened a tavern with female servants there. Rostov recently celebrated his production of cornets, bought a Bedouin, Denisov's horse, and was indebted to his comrades and sutlers all around. Having received a note from Boris, Rostov and his friend went to Olmutz, dined there, drank a bottle of wine, and went alone to the guards camp in search of his childhood friend. Rostov has not had time to get dressed yet. He was wearing a worn cadet jacket with a soldier's cross, the same breeches lined with worn leather, and an officer's saber with a lanyard; the horse on which he rode was a Don one, bought on a campaign from a Cossack; the crumpled hussar cap was smartly put on back and to one side. Approaching the camp of the Izmailovsky regiment, he thought about how he would hit Boris and all his fellow guardsmen with his fired fighting hussar look.
The guards went through the whole campaign as if on a festivities, flaunting their cleanliness and discipline. The transitions were small, satchels were carried on carts, the Austrian authorities prepared excellent dinners for the officers at all the transitions. The regiments entered and left the cities with music, and the whole campaign (which the guardsmen were proud of), by order of the Grand Duke, people walked in step, and the officers walked in their places. Boris walked and stood with Berg, now a company commander, all the time of the campaign. Berg, having received a company during the campaign, managed to earn the trust of his superiors with his diligence and accuracy and arranged his economic affairs very profitably; During the campaign, Boris made many acquaintances with people who could be useful to him, and through a letter of recommendation he brought from Pierre, he met Prince Andrei Bolkonsky, through whom he hoped to get a place in the headquarters of the commander in chief. Berg and Boris, clean and neatly dressed, having rested after the last day's march, sat in the clean apartment allotted to them in front of a round table and played chess. Berg held a smoking pipe between his knees. Boris, with his usual accuracy, with his white thin hands placed the checkers like a pyramid, waiting for Berg's move, and looked at his partner's face, apparently thinking about the game, as he always thought only about what he was doing.
Speculation (Latin speculation, stalking) is the process of making a profit from the difference between the cost of buying and selling.
On the basis of these features, formally, all trading operations that play the role of an intermediary link in the movement of goods from manufacturers to buyers can be formally classified as speculation. In Soviet times, speculation was qualified as a criminal offense, today it is recognized as a significant element of the market mechanism.
A speculator is a market entity (company or individual) who makes purchase and sale transactions in order to obtain personal financial gain.
Areas of speculation
In today's economy, speculators are present in most markets. Among market speculators, the following categories can be distinguished:- professionals. They operate with large amounts of financial resources, and often influence price movements in individual instruments for profit;
- amateurs. They strive to earn easy money by investing a small amount of funds, including borrowed funds.
- currency. An exchange player who buys and sells currencies to make a profit. According to the IMF, foreign exchange transactions worth more than $1 trillion are made daily;
- real estate. Acquire real estate for further resale at a higher price in the short and long term;
- metals. buy non-ferrous and precious metals, and receive profit due to the difference in their value at different time intervals.
stock speculators
Stock exchange speculators (traders) are important subjects on the stock exchange who expect to make money on trading stocks, bonds, options, futures and other securities. Their activities are closely related to stock hedging - the procedure of insurance against unwanted changes in the value of trading instruments, real goods and futures contracts.In accordance with the nature of open positions, traders are divided into two groups:
- "Bulls" - play for an increase and buy securities based on the future growth of quotations, they contribute to the increase in exchange rates.
- "Bears" - betting on a decrease in the price of securities.
The difference between speculation and investment
Speculation and investing are similar to strategic goals - the desire to earn money from the purchased assets, while the trading instruments themselves are not an object of interest. However, there are significant differences between them:- speculators receive income both on the rise and fall of the price, investing is associated only with its increase;
- speculators have a relatively small trading capital, under favorable circumstances, they receive income every day and conclude a large number of transactions, an investor must invest a significant amount of money in order to receive a tangible income, since he can only count on income in the long term;
- Most speculators use technical analysis when analyzing the market situation, investors trust fundamental analysis and carefully examine the company's financial performance before making an investment decision.
Speculation- this is making a profit by realizing the sale of a cheap product with some cheating.
This term comes from the Latin word "specio", which means "look, observation." When carrying out the process of speculation, it is not necessary to carry out any specific actions with the item being resold.
History of speculation
Just a couple of decades ago, the term meant something negative and abusive. For speculation, a special article was assigned in the Soviet Criminal Code, which meant punishment up to and including imprisonment. Soviet citizens also did not like speculators - people who were engaged in speculation in scarce products and foreign goods, selling these things at exorbitant prices.
The first mention of speculative activity refers to the Netherlands of the 17th century, where resale of tulip bulbs was widely carried out. Many residents sold their property in the hope of a quick profit. But a century later, the situation in the country worsened and many were ruined.
At the present time, speculation is a mandatory component of the modern economic market, which must perform the appropriate functions.
There are several definitions of the term "speculation". It:
- the acquisition and resale of various goods at an inflated cost to increase their own profits;
- the acquisition of securities for sale and profit from the received difference from the existing exchange rate on the market;
- proven intent, where the result is profit.
Modern economic experts assure that speculation is a kind of enrichment by realizing the difference between prices over a certain time interval. At the present time, many are interested and continue to engage in speculative activities in the field of valuable documents, expensive metals, currency money, real estate, property, etc. - wherever transactions with large amounts of money and investments are "involved".
The goal of speculation is to buy things at a lower cost and resell them at several times the price. It is from this difference in the price of goods that the speculator's income is based.
Speculation these days
Today, as mentioned above, people involved in speculation play an important role in the economic system of the state apparatus, because they perform specific functional duties:
- help to simplify the situation when reselling goods and securities throughout the market;
- play the role of a person who is able to compensate for the outcome of the concluded agreements, which, for a certain reason, could not take place.
It turns out that speculation also plays the role of one of the participants in the insurance agreement, is a kind of intermediary between the seller and the purchaser of products.
The result of the work of speculators is the expansion of the number of successful transactions, the improvement of relationships in the economic market, as well as the eradication of a rapid drop and jump in prices in the market.
In the people, speculators are divided into "bulls" and "bears". "Bulls" make purchases of goods in order to resell it at a higher price when the country experiences an increase in the price of these products. And "Bears", on the contrary, resell products with the expectation of buying them at a lower price. These names are conditional and are used exclusively in colloquial form, since there are various types of transactions, and the same person can act both as a “bull” and as a “bear”.
Today, experts in the fields of stock exchange and economics make forecasts for the future development of speculative activity as a separate unit in the field of building a business.
Factors affecting the emergence of speculation
It is worth noting that there are several reasons for the appearance of speculation in the economic market. This was also influenced by a number of factors that were recorded in a specific time interval.
Change in value over time
For example, during the Great Patriotic War, the works of great artists, precious jewelry, interior items, etc., were sold almost for nothing, which would have gone on sale at a price corresponding to the market in “quiet” times.
It turns out that the speculator should lead in one or another period of time. Only from the implementation of one transaction, he can become a millionaire, or he can spend a dozen years and not find his gold mine.
Inflation
The second factor influencing the appearance of speculation is inflation. Through the process of depreciation of money, there is an increase in the percentage of beggary in the country, and even those people who were extremely rich a couple of days ago can become beggars.
Political factors
The destruction of the national economy of the state, the collapse of public and private organizations can lead to the fact that the inhabitants of the country will strive to resell their valuable property in the fastest way. It is this time that will be the most advantageous for the implementation of speculative activities.
An unstable political system, doubts about the correctness of the actions of the current government, an imperfect state apparatus, shortcomings in the legislative sphere, incomplete and dishonest work of law enforcement agencies can lead to an instant rejection of long-term investments.
Citizens no longer invest in “business”, but prefer to transfer this money to accounts in foreign banking organizations or purchase securities, precious metals, real estate, etc. on them. The result of such a situation will be the emergence of a large number of speculators who will offer their own services.
Types of speculation
The Russian Federation, at one time, managed to go through all of the above factors, and it turned out that several types of it arose in the process of speculation:
- stock speculation;
- currency speculation;
- speculation in the field of precious metals;
- speculation in real estate.
Let's consider each type separately.
Exchange
Exchange speculation arose at a time when the transition of the economy of the Russian Federation to a market environment, a large number of public companies appeared, without which further activity in the market environment would have been impossible. These companies were companies of shareholders, insurers, public and private banking organizations, various exchange organizations, etc.
Exchange a certain organization is called, which has the same rights and obligations as a legal entity, where the main thing is the creation of a wholesale market segment.
In order to carry out its activities, the exchange recruits and trains brokers (or agents), organizes places to work, maintains statistics of operations performed, monitors existing prices on the market, and also helps to resolve conflict situations that may arise in the market.
Exchanges are divided according to the type of exchange products:
- futures;
- agricultural;
- currency, etc.
Exchange activity implies two types of speculation: hedging and exchange. It is worth saying that these types of speculation cannot exist separately, they are complementary to each other.
- Hedging- this is a certain insurance against a negative jump in the change in the cost of products, which is based on observing the dynamics of the difference between the real price in the market and futures agreements (transactions) for this type of product.
- stock speculation is a specific way to realize profitability by trading, which is based on the dynamics of futures transactions, directly dependent on time and place.
The work of stock speculators entirely and completely affects the correspondence of the market value to the real price of the product.
Currency
The currency market is the place where the process of buying and reselling foreign currency, securities, check documents, etc. is carried out. This market is of two types: exchange and over-the-counter type.
By their nature, all existing operations in the field of economics and finance can be attributed to speculative activities, since the reason for their occurrence is far from commercial necessity.
These transactions arise due to financial interest for reasons where an important element is speculative activity. The economic component of the country is characterized by just such contracts, where the essence is to increase profitability.
It turns out that currency speculation is a kind of activity that is aimed at realizing profits by selling valuable products at an inflated cost in a particular market, but only after a certain period of time after their purchase at the same moment, or immediately, but only in another place.
These currency manipulations have some risks:
- exchange rate - when there is a sharp change in the exchange rate;
- performing - when there is an interruption of the contract for a "human" reason (undermining health, hostility of the agent and the buyer, etc.);
- collaborative - when errors of employees are observed in the accounting, analysis, control and planning of exchange contracts;
- technical - when there are problems in the technical component in the organization of transactions;
- informational - when an insufficient amount of the necessary information is distributed or it is false due to the dishonesty of the exchange employees in order to independently increase the exchange rate to increase profitability.
Speculation in precious metals
Speculation in precious metals is also common, since the performance of speculators as individual investors is characterized by the degree of quotation for various precious metals.
Speculative activity with gold metals has been widely known for a long time. This type of speculation is recognized as the most reliable investment tool. But these manipulations of platinum or palladium metals are also extremely attractive.
The increase in the value of precious metals is always caused by a large number of speculative investments in these metals. One of the important factors for increasing the cost of gold metals, experts recognize information, because this factor can affect the reaction of all partners in the contract.
Real estate speculation
Citizens who are not familiar with the current situation in the field of real estate and in the increase in the cost of housing "push" all the blame on speculators. But this fact is only partially true, since the main thing in this situation is the number of agents working in this area.
If a small number of speculators operate in the real estate market, where a larger number of concluded transactions for the sale or purchase of housing are transferred to their own share, then they really affect the change in the value of real estate. But it is worth noting that this fact is illegal, and the work of these agents is regulated and punished by the relevant state antitrust authorities.
A certain attention to speculation on the part of the state is observed in the control, opening and maintenance of various exchanges, as well as drawing up a program to regulate their work.