speculation are useless to society not true

Mention that you trade and you will definitely hear, "Ohhhh! I do hope you don't short sell!!!" with the compulsory scowl.
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I've had that sh1t thrown at me.

My stock answer is, "Of course I do, all the time. It's the only way I trade"

I love to see their stupid faces when I say things like that. Most of the dense bustards don't even know what it means.
 
MrGecko said:
OK, I will meet you half way:

I would say the process of risk-transferral is facilitated by speculators who warehouse risk, and so the increase in the "smooth running" of market operations is a product (added value) of speculators (amongst other things, like regulation etc).
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Yep, we're on the same page here, MrG... It's just a matter of definitions and I think people have to be aware of how they personally define "useless".
 
Let me try to define useless.

Or rather, how would an alien, completely objectively, define useless?

Since we're talking about society here, we have one parameter fixed already.

Thinking scientifically, you'd have to have a control society to measure us against - i.e., a society without any speculators.

And I guess we're talking market speculators - not any old ticket tout or betting shop gambler.

I reckon your alien would see the markets as a big gathering of speculators, and if you removed the speculators, you'd have a much smaller gathering of people who needed to buy or sell for only when they had physical requirements.

So wouldn't the alien think that the bigger markets with more activity were obviously better?

Just thought about it some more and I reckon that all this speculation about speculation is rubbish. If we do it, we do it, it doesn't matter whether it's useless or not. It's at least enjoyable and if it was detrimental to society that much, it would be made illegal.

So I figure, instead of navel gazing about whether it's good for society or not, you just need to have a couple of soundbites up your sleeve to counter the plonkers who say "well I hope you're not short selling". (Other than asking whether they know what the **** their talking about)
 
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heres my opinion about speculation,

in real world, there are many companies spending billions of dollar on research and development, does not matter for any product of services, the research, money spent could be fail or success. theyre speculating too.. in the end theyre trying to reach consumer and make some profit.

same thing as speculating on the market, trader spent lots of time and money and trying to make some profit from the market. yet the outcome probably sometimes have losses and winnings.

both are same, its just trader at market can see quicker outcome of profit or losses.
 
everyonerich said:
heres my opinion about speculation,

in real world, there are many companies spending billions of dollar on research and development, does not matter for any product of services, the research, money spent could be fail or success. theyre speculating too.. in the end theyre trying to reach consumer and make some profit.

same thing as speculating on the market, trader spent lots of time and money and trying to make some profit from the market. yet the outcome probably sometimes have losses and winnings.

both are same, its just trader at market can see quicker outcome of profit or losses.
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This view would mean that those who gamble on horse races are also no different.


Paul
 
The truth lies in the essence of the market. The value of a security (or anything) always changes, influenced by various factors. People will always lose and gain even if they don't trade and just hold something. This is life... Speculation is just an attempt to avoid losing money because of price change or even earn some money. it is an active form of protecting your funds. Many people do it in a very unprofessional way and thus lose a lot. But it's like driving a car: you can go far with it but at the same time you can die in a car accident.
 
I think of it like this...how is "speculation" in the financial markets any different from the guy who decideds to open a kebab shop or a café or for nike deciding to introduce a new shoe? You do your research into the area and market, make a plan, set up your business and trade. Speculation is no more than trying to profit from demand just like every other business. Your cost of sale is risk rather than grade z meat, coffee beans or leather and rubber. People may want your product and they may not. When you buy or sell you provided a service to somebody and assisted economic flow regardless of whether you yourself made a profit or not. Useful? The financial markets and systems are already in place and are the intergral part of how we all function. Therefor in my opinion speculaion is no less useful than another starbucks or tesco.
 
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scose-no-doubt said:
I think of it like this...how is "speculation" in the financial markets any different from the guy who decideds to open a kebab shop or a café or for nike deciding to introduce a new shoe? You do your research into the area and market, make a plan, set up your business and trade. Speculation is no more than trying to profit from demand just like every other business. Your cost of sale is risk rather than grade z meat, coffee beans or leather and rubber. People may want your product and they may not. When you buy or sell you provided a service to somebody and assisted economic flow regardless of whether you yourself made a profit or not. Useful? The financial markets and systems are already in place and are the intergral part of how we all function. Therefor in my opinion speculaion is no less useful than another starbucks or tesco.
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Im not sure I agree with this IMHO. As i said earlier, I agree with you that speculators are not useless, they add liquidity to the markets and allow the buyers and sellers (who buy and sell because they want to own the product eg. those who want to buy a share in a company or those who want to buy oil to refine) to buy and sell when ever they want to and not have to wait a long time for a matched sale.

Owning a kebab shop or creating a new shoe is different in that they are the creation of wealth. Much like drilling for oil is a creation of wealth. Speculation is more of a transfer of wealth. A speculator could be more akin to the following: say you have a village market and there are a number of stalls that sell shoes. as buyers and seller haggle prices will rise and fall. you as the speculator will TRY to buy shoes that look cheap and try to sell them either to another stall or to a retail punter for more. as we all know the markets are a 'zero sum game' (more like a minus sum game when you consider commisions but you get the idea) therefore the wealth is just transfered from one to another... i would say oil drilling is a plus sum game...

Speculators do have uses... liquidity and also the fact that if they werent there then the UK's economy would really be on its ar$e. We have a nice finance based economy that relies on transfering wealth from other parts of the world.

All just my opinion and I welcome a good debate... :p

Cheers
Fin

(PS wealth doesnt necessarily mean money)
 
Speaking of making a useful contribution and of welcoming debate, we still haven't heard from the thread starter. I'm not keen on somebody just coming in with a rant, effectively saying 'let's you and you fight' and then buggering off. And Christiaan still hasn't answered my question: what's the rant for? It still sounds like just a case of sour grapes to me.
 
Speculators provide liquidity, which can help those who actually need to access the market, eg a hedger.

This is a valuable service
 
Sorry but fck that. For some of us trading is our profession or business like any other activity. To be honest i don't give a damn if it's useful to society (...as if all business and jobs benefit society, yeah sure arms, bureaucrats,etc). I am not a big bank using and abusing public or anybody money. It's hard (very hard) work to raise, keep, and growth the capital I trade.

People who said that speculation is useless to society (a lot lately in the mainstream press) are just angry with the mismanagement of few but they forget that there are lot of independent people who honestly trade for a living.

MS
 
Speculation is useful to society though not for any of the reasons that I have seen thus far. Speculation in any assets acts as a signal to the wider world that the industry or nation or whatever connected with the underlying asset can be assumed to hold profitable investment opportunities. If Coca Cola is going up it can act as a signal that there is demand in the food and beverage industry that has yet to be filled. Of course there is market noise and movement that has nothing to do with any of this, so the signal is not 100% accurate but no one ever said it was
 
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