BO: Congrats and thanks for letting us know. No need to hide your lamp under a bushel.

socialism owns, sorry
you scrublorde capitalists can't step to it

Here's the difference monte. When you invest in a company, you expect a return because the company is profiting through whatever business it has. Much like property (rent), equipment, labor, etc capital too is a mode of production and as such investors expect a return on their providing such an integral mode of production.

Speculation on the other hand does not produce anything. Speculation only serves to hurt people. I can't conceive in any scenario where speculation is actually helpful to an economy or society. In fact I can't conceive of a single scenario where profit from speculation isn't literally stealing. If you profit from speculation you must realize that money is coming from somewhere and that somewhere is ultimately from someone who actually worked for their money.

Frankly, the fact that you need investors these days to fund any sort of startup business is disheartening. This only serves to further concentrate the modes of production in fewer and fewer people. And this is and always has been the folly of capitalism.

skrum "The price of risk transfer is set at the time of the hedge,"

what I am talking about is the enviroment where short term speculation is legal, that makes the marked bounce much more up and down, in general, and the price of the hedge will always be higher

"honest question: does speculation include investments in start-up businesses? because they do all the legwork to become successful, but they are dependent on your money to get off the ground."

monte, if you buy something X, in expectance of the value going up, or shortsell something, in expectance of the value going down, then you are speculation.

if you invest because you think the dividens is worth it (the company will pay out from its profits), then you are investing, these are different things.




skrum, I think the problem is that you cannot reduce the example to a single speculator and user, because then there would not be a marked in which to hedge. there are thousands of users, and thousands of speculator, so even if the timing might make one specualtor not hurt one company, then there probably is at least one company that has to buy or has to sell in that period that will hurt.

When big traders get involved in a market, others can get hurt. This is the fault of the bigness, not the particular market. Regulations should be directed at the abuses that can arise from being big, not necessarily at the market in which the abuses are taking place.

BO:

To find examples of useful speculation, looks at kreuz's posts in this thread.

skrum, the company that are fixing the price before, would probably not have needed to do it in a system without short term speculation. because the short term fluctuations of the system comes from speculation. imagine someone speculating in corn, then they will sell out as much as then can when the harvest is coming, and then they will buy and have maximum corn stored, and sell it the month before the harvest. since they are an extra actor in the field, neither supply or demand, they are making the farmer getting underpaid for his food, while the population is overpaying to buy it. And that is where his profit comes from.

when specualtor plays against speculator, then it is a zero sum game, but often the speculator plays against speculator and investor (/consumer/producer). and in such systems the investor is the one that takes the losses that fules the speculators profit.

short term prices has little to do with the actual value, short term pricing, in which buyers/sellers sometimes will get cought (which is where the money comes from, the guy that just HAD to buy/sell that day).



but how can you not see this, you agree with the suply/demand cross, and the importance of correct pricing to make the system run smoothly. and speculators makes the price jump up and down ALOT, forcing the price to never actually be at the equlibrium, or not even close.

there was a small underproduction of oil in the early part of this decade, I think they produced 2% less than demand, and beacuse of speculators the price of gas went from 25$ to 125$, and bush had to release the stratigic reserve, while speculators hired oiltankers for months, to just sit there filled with oil. so because of them the transport capacity was reduced, and alot of oil was off the marked. and the average person had to pay for it at the gas stations. and it is worse, because for every dollar the speculators gained, the society lost ALOT more.

This looks like speculation in the spot market. The speculator is buying when corn is plentiful and selling it when it is not. Sounds like price stablization to me.

And it reminds me of government price stablization policies. For example, there was the agricultural minister of a country in the Middle East. A guy named Joseph.

You know where to look for the reference.

I am not convinced that this link is correct.