In this article I want to talk about financial speculation.
It has become a bugbear on television and in the newspapers. According to them, speculators are to blame for the current financial situation.
Speculators, individuals in double-breasted suits who decide the fate of your investments, are vampires of the market, criticized at every opportunity.
Do you know what I think about speculators? They do a very important job from a financial point of view.
A speculator is just someone who invests in order to make profit, like everybody else.
Have you ever heard of anyone going to a bank and saying, “I want to invest 10,000” but without making any interest. Those who invest want to earn. Those who work want to get paid. It is a rule that applies to everyone
Professional investors help the market to recognize the right price, worldwide.
Imagine a small Brazilian coffee producer. If there were no investors to buy Futures coffee contracts, thus ensuring a certain value to his harvest, do you think he would be better off? No.
The value of his harvest would depend only on those who buy as their job (retailer / refiner of coffee), who have the sole purpose of paying as little as possible.
Those who invest to make a profit are a vital part of the market. Often they bet on a strength or against a weakness, thus creating useful information for other investors, operators and even governments.
This happened to George Soros, who became one of the biggest investors in the world. In 1992 he made a billion dollars in a few hours.
How? He decided to sell $ 10 billion USD in sterling. The world discovered that Her Majesty’s Government was not serious in wanting to remain in the European Monetary System and the Bank of England was forced to get out of the EMS and to devalue the pound.
Trying to gain from the financial system is lawful and fair. We do not need to eliminate speculation. We need entrepreneurs and investors who have developed their financial intelligence and know how money works.
My wish is that you can start building your financial education. Create businesses and make profitable investments. Become a part of the change. It is easier to criticize than to become part of the solution.
To Your Financial Freedom