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(1) A term of opprobrium applied to any financial instrument or transaction of which the speaker or writer disapproves. (2) A financial transaction characterized by the acceptance of greater exposure to price change than might be usual or appropriate for the individual or entity taking the position. (3) A technical term characterizing certain transactions on a futures or commodity exchange in which the entity taking the position is increasing rather than reducing exposure to a specific category of price risk. (4) A position taken because it offers the prospect of capital gain. (5) Purposeful ownership of a less than fully diversified portfolio in pursuit of a superior risk-adjusted return. 'Exactly What Do You Mean by Speculation?' by Martin S. Fridson, The Journal of Portfolio Management, Fall, 1993, pp 29-39, illustrates the difficulties of defining speculation adequately.
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