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And if they don't realise there's a bubble, but continue to add 'buy' side pressure? Speculators are part of the market, not observers, and they absolutely con
by Nursie 6y ago
And if they don't realise there's a bubble, but continue to add 'buy' side pressure?
Speculators are part of the market, not observers, and they absolutely contribute to rising prices, not just price discovery, because they add demand.
- WalterBright 6y ago> they absolutely contribute to rising prices ... because they add demand Speculators buy and sell, in equal measure. That's what makes them speculators. It's a net zero. If they bought and held, they'd be investors.
- Nursie 6y agoHelping to push up prices as they do so, attracting more speculators. That's not a net zero. They also hold what are limited resources for a non-zero amount of time, reducing supply in aggregate. More speculators, more supply constraint. This is not some sort of idealised marketplace where people can dip in and out without any effect.
- WalterBright 6y agoYou're missing that they short things they believe are overvalued, like in bubbles. > This is not some sort of idealised marketplace where people can dip in and out without any effect. You're right. Speculators work to decrease the peak of a bubble and increase the value of a dip. The misapprehension is thinking the effect is only one way.
- Nursie 6y ago> You're missing that they short things they believe are overvalued In the housing market? LOL. > Speculators work to decrease the peak of a bubble and increase the value of a dip. Except that's nonsense, they increase the demand on an already massively in-demand resource, accelerating price rises. Your ideas fly in the face of observable reality.