Economic speculation is an evaluation over the medium term, based on a knowledge of the economic life, of the quality of management of a certain businesses or the vitality of a certain section of the market. It is supported by the conviction that applied economic science can, by analysing the market, be applied to real situations to furnish pertinent explanations. Perhaps it was possible in December 1994, by means of a study of the producers, of the level of stocks, of the demand of consumers and the character of the market, to anticipate that the quoted value of white sugar at $430 per tonne was going to fall in January 1995. To take such a position in selling futures would return just $35 for $430 invested over one month. Why did the price of coffee increase by 135% between November 1993 and November 1994, and that of soya decrease by 20% at the same time? Some specialists profess to understand. The factors affecting agriculture, the systems of commerce and transport, as well as the movements of capital from one market to another, constitute an interpretation of the economic life that the anticipations of speculators express in the prices.
KeywordsFinancial Market Pension Fund Economic Life Economic Science Lever Effect
Unable to display preview. Download preview PDF.