Speculators

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date Speculators CIL 07-14-2008  Re: Speculators PeterL 07-14-2008  Re: Speculators catalpa 07-14-2008  Re: Speculators dapperdobbs 07-15-2008
Posted by CIL on July 14, 2008, 4:10 pm This may not and probably is not the correct group for this, but I hope the moderator will let it through for the group. In the current market situation, a lot of folks are attempting to blame "Speculators" for price fluctuations. In my feeble attempt to make sense of this; is a "Speculator" anyone that does not take procession at the end of a contract and it makes no difference if it is pork bellies, orange juice, or oil. Am I missing something or is this it in a nutshell? thanks cil I really enjoy this group -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Posted by PeterL on July 14, 2008, 5:04 pm > This may not and probably is not the correct group for this, but I hope the > moderator will let it through for the group. > > In the current market situation, a lot of folks are attempting to blame > "Speculators" for price fluctuations. > > In my feeble attempt to make sense of this; is a "Speculator" anyone that > does not take procession at the end of a contract and it makes no difference > if it is pork bellies, orange juice, or oil.  Am I missing something or is > this it in a  nutshell? > > thanks  cil > > I really enjoy this group > A speculator is the current convenient scapegoat. I doubt that many of our politicians know what they mean by the term. I would assume they mean people who buys and sells future contracts. I guess our politicians don't have too much faith in our free market system. -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Posted by catalpa on July 14, 2008, 7:02 pm > > In my feeble attempt to make sense of this; is a "Speculator" anyone that > does not take procession at the end of a contract and it makes no > difference if it is pork bellies, orange juice, or oil. Am I missing > something or is this it in a nutshell? > > thanks cil > In the futures markets speculators normally do not take delivery, but speculators can well take delivery or deal in the cash market of any commodity. The Hunt brothers did this with silver in the late 1970's. In the stock and bond markets it is the norm for speculators to possess stocks and bonds. Speculators are necessary for any normal price based market to function as they are key to providing liquidity. To see what a market is like without active speculators just look at some of the illiquid pink sheets stocks where the bid/offer spreads are wide enough to drive an tandem 18 wheeler through sideways and a stock may not trade for weeks. Speculators make a ripe target for people who don't know better and don't want to do the mental work to understand supply/demand and fear/greed in the marketplace. Note that there are plenty of speculators who lose money. In particular, in the futures makets it is a distinct minority of speculators that make significant profits and the vast majority are losers. -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Posted by dapperdobbs on July 15, 2008, 2:01 am [snip] > Speculators are necessary for any normal price based market to function as > they are key to providing liquidity. [snip] > Speculators make a ripe target for people who don't know better and don't > want to do the mental work to understand supply/demand and fear/greed in the > marketplace. Note that there are plenty of speculators who lose money. [snip] Yes, much of what you say is standardly accepted. But is it not true that in today's hedge-fund world: a) the speculators (hedge funds, investment bankers, bankers, etc.) over-leveraged in unprecedented amounts b) with financial instruments not available to individuals (many "derivatives" contracts are custom-made) c) used money other than their own, garnering obscene fees for themselves d) then when trades went against them, expect the rest of the world to bail them out e) and created unprecedented chaos across many financial markets? -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.