Thursday, March 22, 2012

Why You Like Speculators

Speculators are taking a real risk with their own money.
Read more: http://www.foxnews.com/opinion/2012/03/13/yes-government-policies-could-help-bring-down-price-gas-today/#ixzz1p6uPqYCL

Speculators are part of market signals and they help in two ways.  First, their actions smooth out swings in market prices.  Second, when they send up prices in advance, it provides a signal to some who may be able to take action which will prevent the expected higher prices; IOW, if speculators bid up prices based on fears that Iran will close the Straits of Hormuz (which I think would be a death reflex only), it provides an incentive for other producers to increase output to capture the new high prices.

Give the speculators "some love."

No comments:

Post a Comment