There is only one error that I can see -- index funds don't always bet on rising prices. There are exchange-traded funds that take the short side.
Here's the chart that accompanied the article:
Posted on 07/03/2008 7:32:43 PM PDT by USFRIENDINVICTORIA
Politicians who try to make oil cheaper by restraining speculation will just make things worse
ALTHOUGH the price of oil continues to hit new records, it has in one respect been a quiet week on the oil markets. America’s lawmakers are celebrating Independence Day by taking a few days off. That has led to a brief interruption in the torrent of proposals aimed at curbing speculation.
Ten different bills on the subject are in the works in Congress. Before the House of Representatives shut up shop, it approved one by a vote of 402-19. America’s politicians are not the only ones to have fingered speculators for the feverish rise in the price of oil and other raw materials. Italy’s finance minister believes that there is a “magnum of speculative champagne” included in the price of each barrel. Austria wants the European Union to impose a tax on speculation. Saudi Arabia and other big oil producers routinely blame the price on frothy markets, rather than idle wells.
The accusers point to the link between the volume of transactions on the futures markets and the price of oil. Since 2004 the near tripling of trading in oil on the New York Mercantile Exchange (NYMEX), the world’s biggest market for the stuff, has neatly coincided with a tripling in the price.
What is more, investing in oil has become something of a fad. Commodities traders and hedge funds with long experience have been joined by less expert sorts, including pension funds and individuals. All this, the theory runs, is contributing to a bubble in commodities. The rush of punters betting on higher prices is begetting a self-fulfilling prophecy: it is the tide of new investment, rather than inadequate supply or irrepressible demand, that is pushing the price of oil ever higher.
Follow the oil, not the futures This reasoning holds obvious appeal for those looking for a scapegoat. But there is little evidence to support it. For one thing, the surge in investment in oil futures is not that large relative to the global trade in oil. Barclays Capital, an investment bank, calculates that “index funds”, which have especially exercised the politicians because they always bet on rising prices, account for only 12% of the outstanding contracts on NYMEX and have a value equivalent to just 2% of the world’s yearly oil consumption.
More importantly, neither index funds nor other speculators ever buy any physical oil. Instead, they buy futures and options which they settle with a cash payment when they fall due. In essence, these are bets on which way the oil price will move. Since the real currency of such contracts is cash, rather than barrels of crude, there is no limit to the number of bets that can be made. And since no oil is ever held back from the market, these bets do not affect the price of oil any more than bets on a football match affect the result.
The market for nickel provides a good illustration of this. Speculative investment in the metal has been growing steadily over the past year, yet its price has fallen by half. By the same token, the prices of several commodities that are not traded on any exchanges, such as iron ore and rice, have been rising almost as fast as that of oil.
Speculators do play an important role in setting the price of oil and other raw materials. But they do so based on their expectations of future trends in supply and demand, not on whims. If they had somehow managed to push prices to unjustified heights, then demand would contract, leaving unsold pools of oil.
The futures market does sometimes signal that prices are likely to rise, which might prompt speculators to hoard oil in anticipation. But it is not signalling that at the moment, and there is no sign of hoarding. In the absence of rising stocks, it is hard to argue that the oil markets have lost their grip on reality.
Some claim that oil producers are in effect hoarding oil below the ground. But there is also little sign of that, either among companies or countries: all big exporters bar Saudi Arabia are pumping as fast as they can.
It takes two to contango Despite their dismal reputation, the oil speculators provide a vital service. They help airlines and other big oil consumers to hedge against rising prices, and so to reduce risk—a massive boon amid the economic turmoil. By the same token, they provide oil producers with more predictable future revenues, and so allow them to expand more confidently and borrow more cheaply. That, in turn, should help to lower the price of oil in the long run. Any attempt to curtail speculation, by contrast, is likely to make life harder for firms and oil more expensive.
Even if we bloc speculating here, Dubai or worse, Nigeria will open a bourse there with even less regulation.
The article mentions iron ore, a commodity not traded on the futures market.
Rio Tinto recently raised prices for ore to China by 85%, Korea 97%, and Japan by 95% .
Does anyone think they’ll eat all of the increases?
When will they ever learn that you can’t regulate functioning markets?
It's essentially an auction, where there's not enough oil to keep everyone happy. People still need to get to work, or drive the kids to the beach, etc., and they all want that last barrel of oil. The oil will go to the bidder who wants it the most.
The Dems want to pretend Supply and Demand isn’t real. If you like $5/gal, Thank Congress.
Pray for W and Our Troops
The Democrats are banking that the voters won’t learn that, until at least the second week of November.
Speculation in the futures market is not the ONLY cause of high prices, but it is one of the factors driving the price up. The primary rise in prices has been the negligence in both the White House and in Congress on energy policy.
The DC Oil Barons are worse then even the OPEC Oil Barons. Perhaps citizens should sue the US Government for price gouging. Or perhaps an anticompetitive lawsuit is in order. The US Congress and Presidency control access to vast amounts of oil and they are restricting access to this oil and are partly responsible for the high prices and price gouging (simple Supply and Demand physics). And through Royalties, the US government is by far one of the highest percentage profiteers in the leasing of producing US oil resources.
Speculation has, as we have been learning to our great detriment, driven housing prices to very high levels, and a lot of folks who thought they had no choice if they wanted a house are stuck with bankruptcy as a consequence.
Speculators can have very very strong influences on markets. If you really need a barel of oil, and supply is inelastic, then a well healed speculator can make you pay well above the marginal cost of producing that barrel of oil.
Contact your Congress critters to let them know that you are tired of high gas prices.
Politicians will regulate anything they can get tax money from. California taxes by percentage, not on gallons. Think they want to see gas prices come down. Pelosi doesn’t care if people go broke, as long as she can get the tax money for her friends.
Demand doesn’t have to double for the price to double. If there is a shortage of something that is in very high demand then buyers will keep outbidding each other bidding the price higher and higher and the price will rise. As long as supply does not meet demand there is a shortage and prices will rise. There is no linear mathematical formula for telling how much the price should rise in relation to demand and supply.
“We” are not going to regulate the speculators. If the speculators are regulated then the only thing that will happen is that the government will get more power over the economy. That doesn’t work and is against freedom and the constitution. Why do people say “we” every time they want to give more power to the government with a new law to regulate the economy or our lives. We have much too many laws as it is. The government is not “we” . The government is the enemy of the people and of the individual.
You are right that speculation is going on in other countries and those countries have different laws and regulations than here in the U.S.. Funny how all these speculators in different countries with different laws agree on the price. It’s not the speculators that are causing the price to rise but that supply has not kept up with demand.
Interesting
Blame the speculators, at least in part. Repeal the “Goldman Sachs Loophole” right now. Don’t believe the B.S.
Please explain what the “Goldman Sachs Loophole” is & why it needs to be closed. I’m not familiar with it.
In the case of real estate, use one of the bubble states as an example. Let's pick Florida. Using ballpark numbers, Florida has about 16 million residents. Of those, perhaps 10 million are home owners. At any given time, perhaps 5 percent of homes are for sale. So, at any given time, 500K homes are for sale. Some people will be planning on moving out of the State but that will be offset by people wanting to move into the State. The majority will never-the-less be, in-State sellers selling to in-State buyers.
Now, If suddenly from around the world 100K speculators descend upon the state, there will suddenly be far more buyers that sellers and the market will bid the prices up. Prices being bid up will force normal buyers sitting on the fence to buy and will attract new speculators.
So, this is a very simplistic example of how just a few speculators can drive a market bonkers.
The oil futures market is very different from the real estate market.
For instance, the world’s stockpile of houses isn’t burnt up and replaced every day.
Unless you’re a major oil producing nation — it simply isn’t possible to hoard a significant supply of oil. Speculators aren’t hoarding the stuff — they’re simply betting on the future prices.
This is not true. If you really need a barrel of oil, you buy it on the cash market. The futures market does not drive the cash market. In fact, if futures prices get too far out of line from the cash market, arbitrageurs will step in and profit by bringing the prices back into sync. So-called “speculation”, which is how people are incorrectly describing the participants in the futures markets, has little, if anything to do with the direction of prices. According to the futures industry association who oversees the markets, 70% of trades in the oil futures markets are by hedgers - people who actually intend to take delivery (eg airlines) and people who actually intend to deliver (eg oil companies). Plus, the shorts and longs are about even, so there is no lobsidedness pushing prices upward.
The analogy to the housing market doesn't work because futures contracts are created and destroyed as positions are entered and exited. A futures trader can put on a position and then sell it at either a profit or a loss (or a breakeven) without having to actually receive or deliver any oil. A speculator in the housing market, however, can only go long, and can only do so with a real house. If the house speculator wants out, they have to sell the house on the cash market. This is not the same as the commodity futures market. In places like Las Vegas, there are countless houses sitting vacant, with speculator-owners who may or may not be able to make their mortgage payments. In other words - housing speculators created a glut. Oil futures speculators are not storing barrels of oil in their backyards, nor in warehouses, nor anywhere else. There is no glut being created. You have to compare the housing market to the CASH commodities market. In the cash oil market, demand exceeds supply, and will continue to do so unless there is a severe worldwide recession, or some other external event that changes the dynamics of the market.
Are you proposing that speculation be outlawed?
Arbitrage works the other way as well, buying in the cash market and selling in the futures market will drive the cash market up. Furthermore, the sellers in most cases have the choice of selling in the case or futures markets, so they are their own arbitrageurs.
And as I said, if you don't think speculators cannot drive prices, explain the real estate market.
Actually, banning speculators is not the subject of the proposed legislation that is the subject of this article. The legislation would only enforce the same position limits on index speculators as there are on any other speculators in the futures markets and would treat investment banks as speculators and not as “commercials” as they currently are.
You are repeating the talking points of the Democrats/Marxists.
Democrats being Marxists naturally blame the speculators ( the free market) and the oil companies (private companies/Capitalism) for the skyrocketing oil prices.
Speculators are not causing oil prices to rise. Neither are U.S. oil companies. OPEC has because because they have purposely held back production.
The reason oil prices are high is because supply has not kept up with demand since 2005.
Futhermore speculation is happening in many markets around the world, London, Dubai, Asia etc. So you and Democrats/Marxists are saying all these speculators in different countries with different laws are all conspiring to set the same price. That is a ridiculous assumption. This fact shows that is the price that supply and demand allow.
Democrats think further government regulation of the free market will improve things. I have seen hundreds of examples where government regulation and interference has made things much worse (oil drilling, health care,Colleges, public schools, USSR, Eastern Europe etc.)
If you are right and this is speculative bubble then prices will fall like they did in the housing sector. But you are wrong. I’ll see you here in 3 months when the “bubble” will not pop but oil prices will be $200 and then next year when they’ll be higher than that.
Hayek shows just one reason why government planning can never work: http://www.mackinac.org/article.aspx?ID=9529
http://www.takimag.com/site/article/the_diversity_recession_or_how_affirmative_action_helped_cause_the_housing/
“Uncovering the roots of the disastrous home mortgage bubble that popped last year will keep economic historians busy for decades. Yet, one factor has so far been largely overlooked: the bipartisan social engineering crusade to drive up the rate of homeownership by handing out more mortgages to minorities.
More than a negligible amount of the blame for the mortgage meltdown can be traced back to multiculturalism: government-mandated affirmative-action lending, demographic change, illegal immigration, and the mind-numbing effects of political correctness.”
_______________________________
However the market corrected itself in spite of all these laws and regulations and now we have lower home prices but of course the liberal media makes it worse than it was and now home prices being low is bad. But the liberal media is lying again hiding the true cause which I just posted above and instead blaming free market capitalism. I heard home sales are rising again so the market is working despite all the government interference. The liberal media exxagerated the problem otherwise home sales would not be rising. actually the job losses and coming recession are caused by skyrocketing oil and gasoline prices not any housing bubble.
Ding ding ding rignt out of the box.
Well, you are a clueless twit, ignorantly spewing Goldman Sachs propaganda. Futures markets have always had position limits for speculators, and for good and valid reasons. The particular legislation under consideration would only classify investment banks as speculators rather than as commercial participants in the market(producers or consumers of the physical commodity). Why do you object to this? Either you are on GS payroll or are you really that clueless. Or maybe you still think that after all that has happened in the last 6 months that what is good for GS is good for America.
You can educate yourself about the specific problems in this market by reading Testimony of Michael W. Masters Managing Member / Portfolio Manager Masters Capital Management, LLC before the Committee on Homeland Security and Governmental Affairs United States Senate May 20,2008
As to your ignorance of economics, I don't know how to cure that. You are probably going to lecture me about "free markets" and all that stuff that you are actually also totally clueless about. The classic economics theorem on free markets is the so-called "welfare" theorem (which has nothing to do with THAT kind of welfare). It states that in order to get the benefits that you expect from a free market, three conditions must hold: 1.) no monopolistic (or ogopolistic power). 2.) No information asymmetries and 3.) no externalities.
Not only do not all of these apply to the current oil futures market with a large fraction of total positions held by long side only speculators, but in fact, none of them apply.
Come back and we can argue further when you have a clue what you are talking about.]
But if your only response to this is to call people Marxists then I am going to continue to call you an ignorant and foolish tool of the investment banks.
Speculators.
Are the ones, who are going to plummet the price of oil, when the time comes.
Emphasis is on TOO. You needed to spend more time studying how real estate brokers, developers, speculators, mortgage brokers and mortgage banks worked synergistically to run this speculative bubble in which everyone who wanted to own a house was forced to participate willy-nilly.
It was a bubble even before Greenspan's 1.75% negative amortization liar loans.
Furthermore, you are putting words in my mouth without understanding what I said, because you don't understand now speculators make money in markets where there are inelastic supply and demand curves, probably because you don't understand the classical theory of economic rents (see Ricardo).
The question on the table is what to do if anything about long side only index speculators who have none of the position limits that apply to other speculators in futures markets. That is the subject of the current legislation. As far as anyone has argued, this particular class of speculators serves no useful purpose.
Since the do not buy and sell, but merely buy and hold positions of ever increasing size, they do accumulate commodities in fact. Oil producers, instead of producing and selling on the spot market, can sell on the futures market to customers who never want to take delivery. So they leave the oil in the ground.
And when supply is relatively inelastic, it is price that sets consumption. This is the classic theory of rents (read Ricardo on the subject). But when demand is also inelastic and there are externalities (i.e. you will stop eating out in order to pay for gas to get to work), then the price above the marginal cost of production is arbitrary, and speculators can, by taking a small quantity off the market, drive prices up for everyone. Long side only speculators, in effect, by accumulating ever larger futures positions are paying producers to keep their oil in the ground.
See Master's paper, linked at post #26. Then read fso301's post at #18. Then you will begin to understand a lot more about what is going on. If you want the graduate level course read Soros's books on his "reflexivity" principle. Then read some economic history of bubbles and crashes, and then you will understand how we hoodwinked ourselves into an ungodly economic mess all worshiping at the altar of what we thought was a free market but turned out not to be.
You, AndyJackson are repeating the Democrats/Marxists’ talking points, blaming the speculators etc. Your post sure sounds like Democrat talking points to me.
The fact is that speculators and oil companies are not manipulating oil prices. Oil prices are rising because supply has not kept up with demand since 2005. That’s simple economics. World Oil production has barely risen since 2005 while world oil demand has skyrocketed during that time.
http://en.wikipedia.org/wiki/Peak_oil#Production
“World oil production growth trends were flat from 2005 to 2008. According to a January 2007 International Energy Agency report, global supply (which includes biofuels, non-crude sources of petroleum, and use of strategic oil reserves, in addition to crude production) averaged 85.24 million barrels per day (13.552×106 m3/d) in 2006, up 0.76 million barrels per day (121×103 m3/d) (0.9%), from 2005”
Economic shortage is a term describing a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, a shortage occurs when there is excess demand; therefore, it is the opposite of a surplus.”
http://en.wikipedia.org/wiki/Economic_shortage
So there is a shortage because supply has not kept up with demand. You should learn about definitions and economics and stop believing the Democrats/Marxists and the liberal/Marxist mainstream media.
I believe in free market capitalism .What do you believe in an economy regulated by government idiots or in full Marxism/socialism? It seems like you are a Marxist to me since you believe government can better run the economy than free market speculators. I believe in no regulation by government. Read Hayek, Friedman's Free to choose and Ayn, Rand to see that free markets works but socialism/government planning doesn't : Genius Hayek destroys Socialism/government planning
I'll meet you here next year to see that the price of oil will be at least $200 per barrel . If this rise in oil prices were a speculative bubble or driven by speculation then it will surely pop soon. But it won't because the price is being set by the law of supply and Demand not speculation.
Your name calling says more about you than me and name calling from anonymous posters on the Internet doesn't bother me. I picture you in a rabid rage, calling me names. It is just amusing to me that words on a screen can get others angry.
The legislation to reclassify investment banks as speculators rather than as "commercial operators" would seem at worst harmless, so why does the proposal to do so get your dander up so much that you call those who propose it, or those who think it a good idea, Marxists?
From your vehemence it sounds like you are one of the pigs with his snout in the trough.
And by the way you ignorant lout, had you read what I wrote, I had already attributed the problem to inelastic supply and demand curves, which is why keeping speculation under wraps actually matters in the first place.
I believe in a lot less regulation. But I think laws against fraud, murder, theft, rape, driving down a public street at 200 MPH are in our best interest.
And BTW the reason we have a lot of economic regulation is because it turns out the having the world run by unregulated monopolies is worse than government regulated monopolies. Perhaps you would like a return to the unregulated days of the Trusts before that great socialist reformer, our first Marxist president, Teddy Roosevelt. Me, I think he moved in a necessary direction.
I believe in free market capitalism with no government regulation. However of course I believe in some laws that protect individual rights, life, property, contracts, from other individuals and from government.
How can you say you are not a Marxist if you agree that the Marxist/"progressive" Roosevelt moved in the right direction. Yes I believe that the U.S. should return to the limited government of the 1800's.
Monopolies are created by government.
"The alleged purpose of the Antitrust laws was to protect competition; that purpose was based on the socialistic fallacy that a free, unregulated market will inevitably lead to the establishment of coercive monopolies. But, in fact, no coercive monopoly has ever been or ever can be established by means of free trade on a free market. Every coercive monopoly was created by government intervention into the economy: by special privileges, such as franchises or subsidies, which closed the entry of competitors into a given field, by legislative action. (For a full demonstration of this fact, I refer you to the works of the best economists.)"
"The necessary precondition of a coercive monopoly is closed entry—the barring of all competing producers from a given field. This can be accomplished only by an act of government intervention, in the form of special regulations, subsidies, or franchises. Without government assistance, it is impossible for a would-be monopolist to set and maintain his prices and production policies independent of the rest of the economy. For if he attempted to set his prices and production at a level that would yield profits to new entrants significantly above those available in other fields, competitors would be sure to invade his industry."
Ah. Until you told me that I am arguing with a Randian, I didn't quite realize the depths of idiocy of my interlocutor, but this little quote says it all.
Go play with your mommy.B-bye.
bump for later
The price of oil is likely to plummet — just as it has before — when the fundamentals of supply and demand shift.
Speculators, by providing liquidity to the market, will help the futures market discover the new price of oil futures much quicker than it would otherwise.
The Democrats are betting that the shift in market fundamentals will coincide with their regulations on speculation — so that they can take all the credit for cheaper oil. If the GOP lets this happen, it deserves the consequences at the polls.
One of the differences between the housing market and the oil futures market is that when a speculator buys a house, it is no longer available for other buyers. Either he lives in it or he puts it up for rent.
When a speculator buys an oil contract, he hasn't reduced the oil available for end users.
Master's shows a correlation between oil prices and levels of speculator interest — but, he does not provide solid evidence of causation (IMHO). The “Goldman Sachs Loophole” is only a loophole if there is indeed a need to regulate index speculation — and there is no need to do so, unless speculation in futures markets actually causes price increases in the cash market. Master hasn't proven that the increased speculation isn't caused by rising prices, which have attracted investors & traders to the market.
I've read plenty of economic history, & taken graduate-level economics courses. I've also lived through some bubbles and crashes — so I know that they can happen. I haven't read anything by Soros — though I suppose I should force myself to; because, despite his politics, he does appear to know about market manipulation.
IMHO, there is a bubble in the oil market — but it isn't caused by speculators. The root cause is a shift in the fundamentals of the market — supply is lagging behind demand.
Just when a huge pent-up demand for energy has been unleashed in China and India (amongst other rapidly developing nations) — western governments are doing what they can to restrict new supply. These governments are motivated by the “global warming” panic to drastically reduce the consumption of oil. To them, high oil prices are not a problem — they are part of the solution.
In the U.S., you continue to lock up tremendous supplies of oil — to say nothing of coal and nuclear power.
The result is a very sticky market, on the supply side. The demand side is being tasked to make all the adjustments — by reducing demand. If it were just a matter of the U.S. reducing demand — that might be relatively painless. With the new demand-side pressures coming from the developing world — finding a new market equilibrium point will be very painful indeed.
In the medium to long term, the world will leave the oil age behind. During the transitional period fewer restrictions on the supply side are necessary — or consumers will be burdened with making all the adjustments at the demand side.
The role of speculators in this mess is to provide the markets with the liquidity necessary to discover new equilibrium prices. Government interference in the market has been a large part of the problem — more interference isn't the solution.
Please see my post #41. I meant to include you in the address line.
The long side only index speculator is is a different breed of speculator. He is not providing liquidity to match supply and demand. He is taking current supply off the table.
The reason that spot and futures prices are virtually identical is that crude suppliers can sell their product on the spot market or on the futures market, whichever is higher.
Unless you take delivery and store the oil, you are not taking supply off the table.
If you buy it and tell the seller to leave it in the ground, you have taken supply off the table.
There are two problems. First is that index speculators don't have position limits because they are trading swaps with investment banks which through a loophole in the rules don't have position limits because they are classed as commercials rather than speculators.
Second, the problem that Masters specifically discusses are the very large long side only positions being taken by pension funds, university endowments, etc. encouraged by what they see has high inflation and low interest rates.
They don't see themselves as long and short speculators, but as accumulators of a net long term commodities position as a bet on inflation and growing demand.
Sorry, the seller isn't going to do that because he only gets paid for the oil he delivers.
you have taken supply off the table.
Wrong.
If so, then they are betting on the market fundamentals. You put a lot of faith in what Masters has to say — yet the pension funds and endowments you refer to employ many investment managers, who are at least as qualified and sophisticated as Masters. If they thought that the price rises were just due to the piling on of speculators; then they would not think oil futures were a suitable investment vehicle. They would have to be very careful to avoid being caught in a speculative bubble; because all of those funds have very strict rules about the levels of portfolio risk allowed.
Someone in a previous post made the comment that there are only so many futures contracts and therefore it is easy to run prices up. That is not true. Initially, there are zero futures contracts, until someone takes a position, either long or short. Then a contract is created. The person on the other side of the contract could be a hedger, a speculator, or could even be looking to add a leg to a spread or a straddle, or whatever. When that position is closed out prior to expiration, that contract ceases to exist. It disappears. This is part of the reason that the analogy to the housing market doesn't work. The actual speculators in futures contracts have no interest in either taking delivery nor in delivering. They take a position in the hope that the market moves in their direction. If the market moves against them, they can have a stop to immediately close their position at whatever amount of loss they are willing to take. This is another reason the real estate analogy doesn't work.
“sellers in most cases have the choice of selling in the cash or futures markets”. Sellers in the cash market would have to have product to deliver, so I don't think would work for arbitrageurs, who are generally speculators, not producers.
“if you don't think speculators cannot drive prices, explain the real estate market.”
1. Speculators in futures trade in contracts, not physical products. Those contracts are created and destroyed at will as positions are entered and exited.
2. Speculators in real estate trade in actual, physical properties, of which they must take possession.
3. The term “Speculator” in futures markets and in real estate are two different things, with completely different meanings and sets of rules. The risks are not the same. The transactions are not the same.
4. The real estate market is analogous to the “cash” commodities markets. I think people misunderstand this, since most people buy real estate with a mortgage, but it is still a physical, cash market.
5. The correct analogy is between real estate buyers (of all types) and the buyers in the oil cash market. That is where the real price increases occur. Demand exceeds supply and prices are bid up. The futures traders simply make their best guess as to whether prices will continue up, or will reverse. They could be right and they could be wrong. But they don't drive the cash price (which is what effects the price we pay at the pump). Supply and demand (and some fear and greed) drive the cash price.
6. Real estate prices were driven up by people buying actual houses, not futures contracts. The big drop in RE prices is because those houses actually exist and the actual owners can't afford them, especially the housing “speculators” who hoped to flip them at a profit. They weren't able to put in a sell stop to liquidate their position if the price of the house dropped by $1,000. Again, no analogy to the commodity futures markets.
Bottom line; there is no correlation between speculating in futures and speculating in real estate. I've done both. I drive the house prices in a neighborhood either up or down, short-term by paying either too much or too little for a house. I can't drive the price of gas at the pump in either direction by taking a long or a short oil futures position. The word “speculating”, or “speculator” may look the same, but they have nothing to do with each other.
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