Speculators or investors: One in the same

Those #!*+%¤ speculators.

Blame it on the "speculators." Game of the week in Congress (only because Congress goes on holiday every other). A rational person (but see "holidays" above) would know that most prices rise (falls are "good") for 25 different reasons. But it is so less strenuous to find one culprit.

Why do the derivatives markets attract these deviates while the stock markets rely on the prudent, cautious, venerable investor?

I have taught at some of the nation's finest law schools and my opening remarks to students focus on that question. It is perhaps, educationally, my greatest contribution to the entire course. I tell them that it is critical (sometimes I say "vital" but that is an exaggeration) to know the difference.

Speculators: Those who risk capital on the outcome of future events over which they have no control.

Investors: Those who risk capital on the outcome of future events over which they have no control.

Shock! Disbelief! And, finally, knowledge.

The truth is that the securities community got the better wordsmiths while the derivatives folks allowed the jargon to be set elsewhere. Sad, because the millions of shareholders in Exxon Mobil are True Citizens while those who take the same risk in crude oil are reviled.

Somewhere, out there, is an English Ph.D who is looking for work. Hire him or her to level the semantic playing field. Speculators take the same risks as investors (except that the latter pay the mega-fines when management screws up). And speculators are the many mini-insurers who protect the corporate bottom line.

The word "saint" may be a stretch since you might not want to befriend many of them, but they do copious good despite their intentions. Like investors.

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