[MadMarketScientist]

A few of us here are debating whether 'speculation' is useless, as it serves no useful function to society .With most "normal jobs' you produce either a product or a service. But the act of speculation produces nothing as it does not add anything useful to society.

My thoughts are even though speculation seems to produce nothing, it is actually providing a means for other companies to provide products and jobs, like the brokers, software vendors, etc. And then we can add all the taxes we pay.

So bottom line, because we speculate non-speculators does benefit. Tell me what you think?

MMS

[wunderlich]

As speculator one fulfills at least two social functions that would otherwise be shunned very strong:


Take risks that others would not take.

Tolerate uncertainty that others would not endure.


So in total they provide liquidity for the great process of economic (positive or negative) critic.


My two cents.

W.

[Tams]

.


some people call themselves "Liquidity Provider".

[UrmaBlume]

Originally Posted by Tams »

. some people call themselves "Liquidity Provider".

Very well said Tams.

Speculation provides the liquitidy with out which corporations would not be able to raise capital in the capital markets and withou which both suppliers and users would not be able to hedge in the commodity/interest rate/currency markets.

Without speculation the markets could not fulfill their function and without the markets there would not be much of an ecconomy.

[TheNegotiator]

Isn't speculation a function of efficient market theory? If there is a window of opportunity for people to capitalise on something then they will. The window then disappears. The market then becomes more efficiently priced.

Anyway, aren't all traders effectively speculating?

[clmacdougall]

What isn't speculation? Who isn't speculating? Many people in the trades work without knowing if their going to get paid in full or at all for their work when finished. Banks give out loans based upon the probability of repayment. Corporations sign contracts with the belief that their fixed costs won't change dramatically, when in fact they could.
There is no such thing as a job or position that is secure and if you think there is just ask Richard Nixon or any professional athelete who's on the verge of being replaced by a hot rookie.
Trading is an admiral pursuit because knowingly or not you fascilitate an efficient market and if you're good than you're on the right side of that market most of the time.

[SIUYA]

If I open a shop selling pencils I buy for 80cents to sell for $2.00 - i am not speculating, I am receiving a margin for providing ready access to a supply of pencils.
insurance companies - most of the time our house wont burn down.....,
gaming companies - they provide a venue for the entertainment dollar dont they ,
lawyers - where do I start
farmers - why cant we grow our own food in pots and small plots instead of subsiding people who speculate on the weather, food is such a vital part of society it should not be allowed to be in the hands of such speculators - lets privatize it ? (ps...I am a farmers son)


nahhh....
I am in agreement with UB and Tams and figure most people here will agree.
Speculation is about providing liquidity - and feeding brokers of course!

(Negotiator - I think you are pushing arbitrage opps more - free money is not speculating )

[jpennybags]

My benefit to society... I pay taxes, donate to the Salvation Army, and vote. I lend a hand to my neighbors when needed. The lawn gets mowed once a week. I don't abuse credit, and my bills get paid on time.

The subject of "occupation" comes up in small talk occasionally. I'm at a loss to tell folks what I do sometimes. Many times I get the... "so then, you don't really have a job"... or worse yet... "yeah, right" (these are comments not expressed so much in words, but more in attitude). The other side of it is... "what's hot right now"... or they want to talk about some investment they made money on in the past... more often though... "the one that got away"... which is fine by me.

When I was starting out, I gave the most socially acceptable answer that I could... "I'm between jobs right now". I still revert to that answer sometimes... depends on my mood, and whether or not I expect to see you again. It used to be so easy... "I'm a candle stick maker". Others can relate to having a job with a title, a boss, and a place to go every day... "candles are good... I like candles".

Bottom line... I'm a leach, but I'm OK with that.