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Finance: What is speculation? 6 Views


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Description:

What is speculation? Speculation refers to a high risk, high reward scenario in investing. When an investor engages in a speculation, they take on a huge risk (they could potentially lose all their money), expecting that they will actually reap a huge reward.

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Transcript

00:00

Finance a la shmoop what is speculation? wild bets crazy dreams invested upon the [Man placing bet and woman dreaming about money]

00:11

state lottery betting the ranch on red

00:15

drilling randomly on street corners hoping to find oil you don't want to do

00:20

that all right that's speculation the opposite of speculation in a sense is

00:24

well just real investing that is doing research on a company or an industry

00:28

finding the megatrend it feeds into and doing the math on its earnings and [Man completing math work]

00:33

realizing that the company will in fact in two years earn more like five bucks a

00:37

share rather than three bucks a share that well everyone on Wall Street ie the

00:41

stock brokers are publishing and predicting speculation is just kind of

00:45

throwing money at things on a wing and a prayer and you know hoping for that

00:50

miracle yeah but doesn't usually happen so just be an investor

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