A market participant who – has expectations about future prices, – acts on these expectations today in order to avoid a loss or to make a profit, and thus – takes a risk, because his assessment of future market conditions may also be incorrect. Speculators play a fundamental role in the market by assuming risks that other participants do not want to accept. In this way, speculators minimize the risk borne by others. – To portray speculators as “market-disrupting elements” and to demonize them falls short in every case. If, for example, speculators sell Greek government bonds short and the price of these securities falls (further), we should not blame the speculators. Rather, it is necessary to ensure that market participants regain confidence in these government bonds. Common sense dictates that attention be paid to the cause of speculators’ corresponding expectations. – See hedging, soak-up phase, barefoot pilgrims, credit default swap speculation, expectations, grace money, cash speculator, short selling, lug-and-deception thesis, option, overtrading, return, implied, risk management, risk-taker, Soros speculation, speculation, destructive, speculation traders, futures traders, well-funded, futures speculator, loss of confidence, commodity futures contract.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/