How does speculation work?
How does speculation work? I know its kind of like gambling, but I’d like to know specifically how does it work? And how does it affect prices? I don’t know much about it and would love to learn more. Thanks ^^ Im just interested to learn it since I hear quite a lot of varying opinions over it.
Speculation is when you buy something that you think will increase in price for the sole purpose of selling it for a profit later. Examples would be buying homes that you do not intend to live in or use, buying oil futures contracts when you do not need barrels of oil, etc.
Speculation creates artificial demand, which increases the price beyond the level set by true market levels of demand.
—–