What Is Speculation?
Ready to roll the dice in the stock market? In finance, big risk taking is known as speculation. Traders who speculate invest in assets that have the potential for big gains—as well as big losses. Speculative traders and investors, or speculators, purchase an asset in the hopes that its value will increase in the near term. Conversely, they could also invest in the hopes that an asset will lose value, which is a practice known as short selling.
Unlike fundamental analysis, speculators tend to solely focus on price movement. In the stock market, they pay little attention to earnings reports, analyst estimates, or other company history. Instead, their goal is to make a quick profit by getting in and out of a stock, which has inspired the term “fast money.” Often, they do this through technical analysis, such as chart reading.
You could say that speculators are the antithesis of Warren Buffett, the “Oracle of Omaha,” who makes long-term investments in companies usually trading below their intrinsic value. Speculative trading occurs over a much shorter timeframe, be that a year, a couple of months, a few days—or even less.
What Are Some Types of Speculation?
All speculators share one thing in common: They are trying to take advantage of price inefficiencies by buying when prices are at a bottom and selling when they are near a peak. There are a few different ways to achieve this:
- Bullish speculators enter long positions with the expectation that prices will rise in the near term.
- Bearish speculators open short positions in the hopes that prices will fall.
- Short-term traders attempt to “time the market” and are usually in and out of a position in a matter of seconds, minutes, or hours. They could use automated trading systems or place manual orders, and they set buy stops or sell stops to protect themselves from market reversals.
- Swing traders usually establish positions for a longer timeframe, usually anywhere between a few days and one year. Their hope is to profit from the “swing” in price movements.
What Are Some Examples of Speculative Trading?
Speculators who can stomach big risks could also be setting themselves up for big gains. Take a look at a few examples:
The Big Short
Perhaps the best-known speculator is hedge fund manager Michael Burry, known as “The Big Short.” He gained notoriety by shorting overvalued tech stocks in the early 2000s. He was also one of the first to call a bubble in the U.S. housing market, which was fueled by toxic subprime debt. When interest rates rose and mortgage holders could no longer afford to make their housing payments, millions of homeowners defaulted, causing a near-total collapse of the U.S. real estate market and a global chain of falling dominoes, since the loans were packaged and traded by investment banks. This crisis became known as the Financial Crisis of 2007-2008 and led to the Great Recession. Burry is said to have made between $100 million and $700 million from speculation on the event.
Another example of speculative trading occurs with currencies and cryptocurrencies. Traders attempt to profit from the difference in value of one currency with respect to another currency, which can have a dramatic impact on prices. In 1992, George Soros, another hedge fund manager, bet that the British pound would depreciate against the U.S. dollar, netting a billion-dollar profit in the process. Nowadays, Bitcoin speculators have become known as the “new day traders” since cryptocurrencies can be bought in fractional pieces, and their prices have witnessed enormous swings.
Trading opportunities related to the COVID-19 pandemic are yet another example of speculation. When the Federal Reserve slashed interest rates and also injected billions of dollars into the markets through quantitative easing measures, they caused enormous ups and downs, known as volatility. This, in particular, led to speculation of Treasury futures.
What Are Some Risks Associated With Speculation?
Buying at the bottom and selling at the top is much easier in theory than in practice. Therefore, speculators must beware of the numerous risks that come with fast money; otherwise they’re just taking gambles:
- Volatility increases the amount of risk in the market, because price fluctuations present more opportunities to create profits—as well as opportunities to mount losses. Speculators who trade during periods of volatility should have a solid understanding of the VIX, or Volatility Index, as well as support and resistance levels.
- There’s an old saying in the stock market that goes, “You never know you’re in a bubble until it bursts.” When prices rise rapidly, there is the potential for quick gains, but once the bubble pops, capitulation often follows, which makes it very difficult to offload one’s now-overvalued assets.
- Short selling involves buying on margin, which can have a much steeper downside than investing in cash, because one’s losses are compounded. When a phenomenon like a short squeeze happens, a stock’s price suddenly skyrockets, and short sellers can lose exponentially more than their initial investment. In fact, as a way to limit risk, the Federal Reserve has set requirements for short selling, prohibiting an investor from borrowing no more than 50 percent of the price of the shares on margin.
What Are the Benefits of Speculation?
There are upsides to speculation; in fact, many believe that speculators help to make the markets more efficient. Simply by placing their trades, speculators help to add liquidity, and when an asset, such as a stock, is liquid, that means its shares can be bought—and sold—quickly with minimal impact to its market price. Therefore, liquidity makes it easier to buy and sell whenever it’s necessary. Without such trading activity, the markets would become illiquid.
Without speculators, there would be fewer players in the markets, which would also have an impact on buy-and-sell transactions, thereby widening bid-ask spreads. The spread is the difference between the quoted price (ask) and its immediate purchase price (bid). Therefore, increased opportunities for trading result in easier trading activity.stocks pandemic covid-19 bitcoin real estate housing market currencies pound
How ducks, geese and swans see the world – and why this puts them at risk in a changing environment
Our airspace has only started to become cluttered recently – many birds are struggling to navigate through it.
Each year, millions of birds fly into power lines, wind turbines and the other man-made structures that litter the open air space. These collisions frequently result in the death of birds and, if power systems go down, disrupt our lives and pose financial challenges for power companies.
Numerous bird species, including macaws in Brazil, geese and swans in the UK, and blue cranes in South Africa have been found to be susceptible to collisions with power lines. But any flying bird can fall victim to such a collision.
In some places, these collisions happen so often that they can jeopardise local populations of endangered species.
But birds are highly evolved flying machines. They can fly in tightly packed flocks that weave and turn to our delight and wonder. So why do they fly into things?
How birds see the world
Exploring the reasons behind why birds are victims of collisions has led to new ideas that challenge our fundamental perception of what birds are. In the past, scientists have described birds as “a wing guided by an eye”. This implies that flight has been central to moulding bird vision throughout their evolution.
But now it is safe to conclude that a bird is instead best characterised as “a bill guided by an eye”. Rather than flight, the main driver of the evolution of bird vision has been the key tasks associated with foraging, in particular detecting food items and getting the bill to the right place at the right time in order to seize them. Alongside the detection of predators, this is the task that bird vision has to get right day in, day out.
Birds differ in how much the view from each eye overlaps (called the binocular field of view). The more the eyes look straight ahead, the more the view from each eye will overlap – much as human eyes do – thus broadening the binocular field. For a bird such as a duck, with its eyes positioned high up on either side of the head, the view from each eye will be very different (with smaller binocular field).
We measured binocular field size across a broad range of 39 species of duck, geese and swans. We found that the key driver of diversity in vision between species is their diet and how they forage for food.
Birds that primarily use their vision to locate foods such as seeds, or selectively graze on plants, tend to have broader binocular fields.
However, the binocular fields of species like mallards and pink-eared ducks are much narrower. These birds rely less on their eyes for foraging and more on touch cues from their bills. The vision of birds like these instead provides them with a comprehensive view of the region above and behind their heads.
Birds certainly need to have some visual coverage in front of them. But with eyes placed high on the side of the head, resulting in a very narrow binocular field, they are restricted to retrieving rather scant detail from the distant scene ahead. What matters to them more is placing their bill accurately at a close distance and seeing who is coming at them from the side or from behind.
This finding is not confined to ducks, geese and swans. It probably generalises to all birds, except perhaps some owls (which have more front-facing eyes and rely upon sound to locate prey). The great majority of birds are therefore vulnerable to collisions.
However, it is larger birds like geese, swans and bustards that face real problems. Their restricted forward vision is compounded by flying fast and being unable to change direction quickly. These birds also often fly in flocks, and at dusk and dawn when the light level is lower.
Warning birds of hazards ahead
Understanding the vision of birds from the perspective of foraging and predator detection improves our understanding of what causes collisions. But, more importantly, it allows us to do something about it.
We must not assume that a bird’s view of the world is the same as ours. We are specialised primates with eyes on the front of our heads, and we see the world in a very different way to birds, not only with respect to visual fields but also acuity and colour vision. So, we must try to take a proper “birds’ eye view” of the problem.
Birds are also flying fast. But, as they do so, they are taking in only gross information of what lies ahead – much as we do when driving our cars. As with car hazard warnings, it is necessary to alert birds using markers that may seem excessive.
Birds that are vulnerable to collisions have evolved to fly in airspace that only recently has started to become cluttered. To be clearly visible to a bird, especially to species like ducks and geese, devices that warn birds about hazards ahead must be large, highly contrasting and produce flicker.
When marking hazards, there is no place for subtlety.
Jenny Cantlay received funding from NERC and the RSPB for her doctoral research on avian vision whilst at Royal Holloway University.
Graham Martin does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.africa brazil uk
What happens if a university goes bust?
Universities face growing costs but no prospect of increased funding.
Governments face difficult choices when industries fail. They can stand by while private businesses collapse and see the resulting loss of jobs and revenue. Or they can step in and use public money to prop up these firms.
The Scottish government intervened in 2019 to rescue Ferguson Marine, the last shipbuilding firm on the river Clyde, but faces ongoing controversy on whether it broke state aid rules in doing so. And, of course, the global financial crisis of 2008 saw the UK government intervening to rescue banks such as RBS that were seen as “too big to fail”.
The most recent data from the Higher Education Statistics Agency for the financial year ending in 2022 shows that (excluding pension adjustments, which can skew accounts for particular years) 24% of UK universities reported a deficit.
The Russell Group, which represents an elite group of research-intensive universities, claims it faces an average shortfall of £2,500 on every home undergraduate taught, and that this could grow to £5,000 by 2029-2030.
The outgoing vice-chancellor of Sheffield Hallam University, Sir Chris Husbands, recently suggested that calls to increase fee levels could be perceived as being tone deaf. Faced with their core undergraduate activities being unprofitable, universities have diversified their income by recruiting more international students, despite UK immigration policy limiting their ability to do so.
With no immediate prospect of increased funding either from government or through increased fee levels for domestic students, such restrictions on international recruitment together with damaging rhetoric from the government about so-called “rip-off degrees” means it is no longer unthinkable that a UK university might fail.
To consider what might happen if a university went out of business, we can look at what transpires when other businesses – such as banks – go bust.
Of the brand names that collapsed during the 2008 global financial crisis, few will remember the Heritable Bank. It held 22,000 accounts, making it comparable to the number of students at a mid-size university.
The cost to UK taxpayers of rescuing the Heritable Bank was £500m. The government, via the Financial Services Compensation Scheme, paid compensation to Heritable’s customers and, while some of these monies were recouped, the upfront costs were significant and the endgame did not see all of the cost recovered.
Part of the solution when Heritable failed was that another provider, ING, took on its customers. Were a university to become insolvent, thousands of students would find themselves marooned part-way through a degree programme, with no obvious route to complete it. There is no guarantee that another university would want to absorb a collection of “new” students, especially at fee levels that are already acknowledged to be below the break-even point.
Consequences for students
Even if a neighbouring university was given incentives to step in by the government, there would be practical issues to consider. Despite a potential merger under consideration in Australia, there is little history of mergers between universities in the UK.
The government could step in to avert a crisis. However, compared with the crisis in financial services in 2008, there is no equivalent compensation scheme in place and the public finances are in poorer health. In combination, this means there is no certainty of a government rescue package – and there may be a real reluctance to interfere in the market.
Almost inevitably, a series of messy class action lawsuits would result, with students seeking recompense for fees paid, perhaps over multiple years, that did not result in the qualification advertised. Worse, the shockwaves felt in one university could easily rock confidence in others. Future students might become more interested in the annual financial reports of a prospective university than its traditional prospectus.
Pulling down communities
Beyond the students, there would be significant economic consequences for the region, town or city concerned. Universities are typically large employers, sometimes the biggest in the area, and often refer to themselves as “anchor institutions” – central to the local economic ecosystem in the same way that a household-name retailer might be key to the viability of a shopping mall.
Yet anchors can also drag. In the case of a university failure, the potential for large numbers of high-skilled roles to disappear would be matched by a set of economic ripples that would be felt more widely.
This could range from housing, hospitality and retail being starved of income, to these and many other sectors suffering a shortage of a part-time, flexible workers. There are 142 members of Universities UK, and the 130 universities operating in England are estimated to contribute £95bn to the economy each year. Somewhere between £0.5bn and £1bn is a reasonable estimate of the amount attributable to any one university.
Finally, there would be political consequences. Electorates, of course, comprise many current, past and future students. Accusations would follow that jobs, qualifications and potential futures had been squandered.
The university sector is not immune to the kind of industrial or technological revolutions that have swept through other industries. But neither is it a purely commercial sector. Some of our policymakers and regulators might regard a university failure as an indication that the market is working. If so, they should be careful what they wish for.
Robert MacIntosh does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.uk
Nine women share what it’s like to have a miscarriage
Ten years of studying miscarriage has taught me that no two women will have the same experience.
Miscarriage is a common woman’s health experience, but one that affects people differently. Ten years of studying miscarriage has taught me that no two women will have the same experience, and that the same woman is likely to experience separate miscarriages very differently.
There’s also a great deal of variation in types of miscarriage and a lack of understanding of this, which often leaves women adrift.
A miscarriage is the loss of a pregnancy during the first 23 weeks. It’s estimated that one in five pregnancies end in miscarriage, with most occurring in the first 12 weeks. My research focuses on these early miscarriages.
Approximately 1 in 100 women in the UK experience recurrent miscarriage, which is defined as having three or more miscarriages consecutively. And black women in the UK are 43% more likely than white women to experience a miscarriage.
This article is part of Women’s Health Matters, a series about the health and wellbeing of women and girls around the world. From menopause to miscarriage, pleasure to pain the articles in this series will delve into the full spectrum of women’s health issues to provide valuable information, insights and resources for women of all ages.
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Vaginal bleeding which may be followed by pain in the lower abdomen and cramping are the main signs of a miscarriage. However, 1-5% of pregnancies end in a missed miscarriage: when no pain or bleeding occurs despite the pregnancy not progressing.
This is typically diagnosed by an ultrasound. For a number of the women I interviewed, this happened at their routine 12-week scan. It can be a shocking, unexpected and distressing experience – as Shirley explained:
I went for my scan at the [hospital] and we saw a very small foetus. I was chatting away and then the sonographer said, “I have bad news” – and they told us the baby had passed away at ten and a half weeks.
Nicole described being “gobsmacked” when she was told at her 12-week scan that “there was a sac but nothing else”. She continued:
To me, a miscarriage is when you bleed and have cramps, but I had none of that. I had no idea what a missed miscarriage was … I had no idea the pregnancy had ended.
The 12-week rule
Many of the women I interviewed spoke about the unwritten “12-week rule” of not disclosing a pregnancy until after this point, in case of complications or loss. But following a miscarriage, many women described this wait as being an unhelpful tradition which left them feeling isolated, as family and friends didn’t know what they were going through.
For Nicole and Shirley, there was certainty about the pregnancy ending, but this isn’t always the case. For some women, a diagnosis of miscarriage may be more drawn out.
Grace went to an Early Pregnancy Assessment Unit when she experienced pain during early pregnancy. She had not experienced any bleeding, but had a feeling that things “weren’t quite right”. An ultrasound was unable to locate the pregnancy. She was told her dates might be out and it might be too early to identify the pregnancy, or that it might be a miscarriage. She explained what happened next:
I had a [hormone] test and the levels [indicated] that I was lower in weeks than my actual dates … I had to go back two days [later] and have another test done.
The second blood test revealed that her pregnancy was not continuing, and Grace later miscarried.
Miscarriages are often understood to involve cramping and bleeding followed by the spontaneous expulsion of the foetus or pregnancy tissue. But this scenario rarely, if ever, happened to the women I interviewed. Indeed, miscarriages are often drawn out over days, weeks or even months.
When Miranda first contacted me, she said:
My missed miscarriage was identified quite early, at approximately seven to eight weeks … [but] the process has taken nearly three months.
When I first interviewed Miranda, she was still undergoing her miscarriage and did so for six months in total. While her experience is unusual, it illustrates how varied miscarriages can be.
Women are often told a miscarriage “will be like a heavy period”, yet most of the women I interviewed said that this is woefully inaccurate. Grace said:
This whole idea of a heavy period was not my experience. I was having contractions [and] passing a lot of blood.
‘I blame myself’
Many of the women I spoke with felt responsible for their miscarriage, as Liv described:
I still blame myself … I’ve had doctors, nurses, family, friends and everyone tell me not to blame myself, but I think I [always] will.
Anxieties about fertility and future reproduction were common, as was apprehension during subsequent pregnancies. Marianne told me:
I felt really anxious, especially between finding out I was pregnant at ten weeks and feeling the baby kick for the first time.
Many women also described feelings of failure, as Vicky and Emma did:
I had this real sense that there was something wrong with me.
I’m faulty and I can’t do what women are supposed to be able to do … You just feel fundamentally broken as a woman.
However, some women, such as Ruth, also expressed relief following a miscarriage:
I would have had a medical termination. I’m really glad I didn’t have to … I feel very relieved that it has happened this way.
Views of miscarriage
In the Early Pregnancy Assessment Unit where I was based, after a miscarriage women are offered access to specialist counsellors – a service many made use of and found helpful in navigating their feelings of loss and grief.
The recognition of the way miscarriage affects those who experience it is very welcome because in the past, miscarriage was seen as an unfortunate if routine event – but one that women would and should recover from quickly.
However, over the past 30 years, miscarriage has progressively been framed as the loss of a baby for which the appropriate response is one of bereavement. While many women I interviewed did, indeed, experience grief and distress in the face of their loss, not all did.
This is important because over the 10 years I’ve been researching miscarriage, I’ve become concerned that this latter group of women are not served by current clinical and public approaches to pregnancy loss. At times, this results in women feeling as though there is something wrong in the way they are experiencing their miscarriage.
This is why it’s important to recognise that, just as the physical experience of miscarriage varies, so too do the emotional and psychological experiences.
Susie Kilshaw receives funding from The Wellcome Trust. Wellcome Trust University Award in the Humanities and Social Science Grant number: 212731/Z/18/Z (2019-2025).uk
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