tag:blogger.com,1999:blog-2132506648412240909.post1597174492215907230..comments2023-06-19T06:21:32.114-05:00Comments on Who Moved My Liberty?: On SpeculationProf Jhttp://www.blogger.com/profile/16539902592080231165noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2132506648412240909.post-9907501503263968832012-03-07T21:12:18.325-06:002012-03-07T21:12:18.325-06:00In the futures market, for every long position the...In the futures market, for every long position there is a short position. Derivative markets are a zero-sum game. So the price pressure from one side is matched with price pressure from the other side.Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-2132506648412240909.post-5646554031710491782012-03-07T20:06:11.380-06:002012-03-07T20:06:11.380-06:00One of the curious things is that when I hear folk...One of the curious things is that when I hear folks blame speculators for high prices, and I ask them to explain oil speculation, they can never quite tell me how it works. Hence, they are simply relaying what they hear on the evening news.<br /><br />So, more learning here. Speculators take a long position in futures contracts, betting that the price will increase before the contract expires. They then sell the contract at a profit (or loss if the future price moves down). Like you said, it would take lots of folks doing this (on the buying side) to materially affect prices, especially for the long term.<br /><br />This is a risky endeavor as prices of commodities can swing wildly.Brad Dhttps://www.blogger.com/profile/03950312793230274562noreply@blogger.com