speculation n
1. a message expressing an opinion based on incomplete evidence [syn: guess, conjecture, supposition, surmise, surmisal, hypothesis]
2. a hypothesis that has been formed by speculating or conjecturing (usually with little hard evidence); "speculations about the outcome of the election"; "he dismissed it as mere conjecture" [syn: conjecture]
3. an investment that is very risky but could yield great profits; "he knew the stock was a speculation when he bought it" [syn: venture]
4. continuous and profound contemplation or musing on a subject or series of subjects of a deep or abstruse nature; "the habit of meditation is the basis for all real knowledge" [syn: meditation]

Speculation \Spec`u*la"tion\, n. [L. speculatio a spying out, observation: cf. F. sp['e]culation.]
1. The act of speculating. Specifically: (a) Examination by the eye; view. [Obs.] (b) Mental view of anything in its various aspects and relations; contemplation; intellectual examination. Thenceforth to speculations high or deep I turned my thoughts. --Milton. (c) (Philos.) The act or process of reasoning a priori from premises given or assumed. (d) (Com.) The act or practice of buying land, goods, shares, etc., in expectation of selling at a higher price, or of selling with the expectation of repurchasing at a lower price; a trading on anticipated fluctuations in price, as distinguished from trading in which the profit expected is the difference between the retail and wholesale prices, or the difference of price in different markets.

Speculation has a special meaning when talking about money. The person who speculates is called a speculator. A speculator does not buy goods to own them, but to sell them later. The reason is that he wants to profit from the changes of market prices.

One tries to buy the goods when they are cheap and to sell them when they are expensive. There is a good chance to do that as long as the market price of a good changes often in different directions.

Speculation includes the buying, holding, selling, and short-selling of stocks, bonds, commodities, currencies, collectibles, real estate, derivatives or any valuable financial instrument. It is the opposite of buying because one wants to use them for daily life or to get income from them (as dividends or interest).

Speculation is one of the market roles in western financial markets. The others are hedging, long term investing and arbitrage. Speculators do not plan to keep an asset for a long time.

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