It seems like whenever a particular market has hurt a bunch of people, and we all know that’s happened lately with a lot of markets and a lot of people, the chorus rises up against that group that surely must have made things worse: speculators. But amidst the hysteria and hand-wringing, it’s instructive to calmly walk through the scenarios that speculators and their trading counterparties find themselves in as they go about their business.
Merriam-Webster defines “speculate” as:
1 a : to meditate on or ponder a subject : reflect b : to review something idly or casually and often inconclusively
2 : to assume a business risk in hope of gain; especially : to buy or sell in expectation of profiting from market fluctuations
So it seems that to be a speculator, you need to have a view on something. That’s generally the easy part, in that most people will express a view on just about anything. Whether it is “correct” is another matter entirely, as is the issue of who decides what “correct” is. But acting on those meditations and reflections results in the market itself: two people having different views on the value of some tradable thing, each being willing to swap ownership.