LibGuides: Speculation & Financial Risk-Taking: Speculative Market Practices

Speculative Market Practices

"While the investor seeks to protect his principal as it yields a moderate return, the speculator sacrifices the safety of his principal in hopes of receiving a large, rapid return." [SOURCE]

Terminology Related to Speculative Market Practices

Boiler Room - place where high-pressure salespeople use banks of telephones to call lists of potential investors (known in the trade as sucker lists) in order to peddle speculative, even fraudulent, securities.
Bucket shop -- illegal brokerage firm, of a kind now almost extinct, which accepts customer orders but does not execute them right away as Securities and Exchange Commission regulations require.
Day Trading - the practice of buying stocks or other securities and reselling them within a day (or less) to profit from short-term fluctuations.
Financial Risk - investors’ chance of loss the possibility of financial loss in an investment or speculation.
High frequency trading (HFT) – the use of extremely high speed computers and automated trading algorithms to trade high volumes of stock at lightning speed.
Irrational Exuberance - characterization of market mood in a 1996 speech by then Federal Reserve Chairman Alan Greenspan.
Penny Stock - very low-priced stock very low-priced stock, typically under one dollar, that is a speculative investment.
Pump-and-Dump - illegal exaggeration of value of stock for profit an illegal practice in which the owner of a stock makes false claims about the stock, exaggerating its value, then sells it at a profit (slang).
Real Estate Speculation - During booms in real estate, prices rise quickly, sometimes far above their true value. As in stock investment manias or “bubbles,” a spreading belief that prices will rise indefinitely attracts casual investors who help inflate prices still further.
Risk/Reward Tradeoff - An investment principle that says an investment must deliver a higher potential return as compensation for increased risk.
Speculator - somebody taking risks to make quick profit somebody who buys goods, stock, or foreign currency with a higher-than-average risk in the hope that it will rise quickly in value.

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Books, E-Books & Other Resources -- Speculative Markets

Speculation: a cultural history from Aristotle to AI (E-Book] by Gayle Rogers
Publication Date: 2021
Irrational Exuberance [E-Book] by Robert J. Shiller In this revised, updated, and expanded edition of his New York Times bestseller, Nobel Prize–winning economist Robert Shiller, who warned of both the tech and housing bubbles, cautions that signs of irrational exuberance among investors have only increased since the 2008–9 financial crisis. With high stock and bond prices and the rising cost of housing, the post-subprime boom may well turn out to be another illustration of Shiller's influential argument that psychologically driven volatility is an inherent characteristic of all asset markets. In other words, Irrational Exuberance is as relevant as ever. Previous editions covered the stock and housing markets—and famously predicted their crashes. This edition expands its coverage to include the bond market, so that the book now addresses all of the major investment markets. It also includes updated data throughout, as well as Shiller's 2013 Nobel Prize lecture, which places the book in broader context. In addition to diagnosing the causes of asset bubbles, Irrational Exuberance recommends urgent policy changes to lessen their likelihood and severity—and suggests ways that individuals can decrease their risk before the next bubble bursts. No one whose future depends on a retirement account, a house, or other investments can afford not to read this book.
Publication Date: 2015
Flash Boys: A Wall Street revolt by Michael Lewis Flash Boys is about a small group of Wall Street guys who figure out that the U.S. stock market has been rigged for the benefit of insiders and that, post-financial crisis, the markets have become not more free but less, and more controlled by the big Wall Street banks. Working at different firms, they come to this realization separately; but after they discover one another, the flash boys band together and set out to reform the financial markets. This they do by creating an exchange in which high-frequency trading--source of the most intractable problems--will have no advantage whatsoever.The characters in Flash Boys are fabulous, each completely different from what you think of when you think "Wall Street guy." Several have walked away from jobs in the financial sector that paid them millions of dollars a year. From their new vantage point they investigate the big banks, the world's stock exchanges, and high-frequency trading firms as they have never been investigated, and expose the many strange new ways that Wall Street generates profits.The light that Lewis shines into the darkest corners of the financial world may not be good for your blood pressure, because if you have any contact with the market, even a retirement account, this story is happening to you. But in the end, Flash Boys is an uplifting read. Here are people who have somehow preserved a moral sense in an environment where you don't get paid for that; they have perceived an institutionalized injustice and are willing to go to war to fix it.
Call Number: UofL Main Collection HG 4628.5 L49 2014
Publication Date: 2014
Noise: living and trading in electronic finance [E-Book] We often think of finance as a glamorous world, a place where investment bankers amass huge profits in gleaming downtown skyscrapers. There's another side to finance, though--the millions of amateurs who log on to their computers every day to make their own trades. The shocking truth, however, is that less than 2% of these amateur traders make a consistent profit. Why, then, do they do it? In Noise, Alex Preda explores the world of the people who trade even when by all measures they would be better off not trading. Based on firsthand observations, interviews with traders and brokers, and on international direct trading experience, Preda's fascinating ethnography investigates how ordinary people take up financial trading, how they form communities of their own behind their computer screens, and how electronic finance encourages them to trade more and more frequently. Along the way, Preda finds the answer to the paradox of amateur trading--the traders aren't so much seeking monetary rewards in the financial markets, rather the trading itself helps them to fulfill their own personal goals and aspirations.
Publication Date: 2017
High frequency traders : angels or devils? [Online Resource]
Call Number: UofL Main Collection HG 4529 M33 2013
The World Scientific Handbook of Futures Markets [E-Book] The World Scientific Handbook of Futures Markets serves as a definitive source for comprehensive and accessible information in futures markets. The emphasis is on the unique characteristics of futures markets that make them worthy of a special volume. In our judgment, futures markets are currently undergoing remarkable changes as trading is shifting from open outcry to electronic and as the traditional functions of hedging and speculation are extended to include futures as an alternative investment vehicle in traditional portfolios. The unique feature of this volume is the selection of five classic papers that lay the foundations of the futures markets and the invitation to the leading academics who do work in the area to write critical surveys in a dozen important topics.
Publication Date: 2014
High-frequency trading : background, concerns, and regulatory developments [Free E-Resource]
What Algorithms Want : imagination in the age of computing [E-Book] We depend on -- we believe in -- algorithms to help us get a ride, choose which book to buy, execute a mathematical proof. It's as if we think of code as a magic spell, an incantation to reveal what we need to know and even what we want. Humans have always believed that certain invocations -- the marriage vow, the shaman's curse -- do not merely describe the world but make it. Computation casts a cultural shadow that is shaped by this long tradition of magical thinking. In this book, Ed Finn considers how the algorithm -- in practical terms, "a method for solving a problem" -- has its roots not only in mathematical logic but also in cybernetics, philosophy, and magical thinking. Finn argues that the algorithm deploys concepts from the idealized space of computation in a messy reality, with unpredictable and sometimes fascinating results. Drawing on sources that range from Neal Stephenson's Snow Crash to Diderot's Encyclop#65533;die, from Adam Smith to the Star Trek computer, Finn explores the gap between theoretical ideas and pragmatic instructions. He examines the development of intelligent assistants like Siri, the rise of algorithmic aesthetics at Netflix, Ian Bogost's satiric Facebook game Cow Clicker, and the revolutionary economics of Bitcoin. He describes Google's goal of anticipating our questions, Uber's cartoon maps and black box accounting, and what Facebook tells us about programmable value, among other things. If we want to understand the gap between abstraction and messy reality, Finn argues, we need to build a model of "algorithmic reading" and scholarship that attends to process, spearheading a new experimental humanities.
Publication Date: 2017

Related Subject Headings

Quantitative Finance

Handbook of High-Frequency Trading and Modeling in Finance [E-Book] Reflecting the fast pace and ever-evolving nature of the financial industry, the Handbook of High-Frequency Trading and Modeling in Finance details how high-frequency analysis presents new systematic approaches to implementing quantitative activities with high-frequency financial data. Introducing new and established mathematical foundations necessary to analyze realistic market models and scenarios, the handbook begins with a presentation of the dynamics and complexity of futures and derivatives markets as well as a portfolio optimization problem using quantum computers. Subsequently, the handbook addresses estimating complex model parameters using high-frequency data. Finally, the handbook focuses on the links between models used in financial markets and models used in other research areas such as geophysics, fossil records, and earthquake studies. The Handbook of High-Frequency Trading and Modeling in Finance also features: * Contributions by well-known experts within the academic, industrial, and regulatory fields * A well-structured outline on the various data analysis methodologies used to identify new trading opportunities * Newly emerging quantitative tools that address growing concerns relating to high-frequency data such as stochastic volatility and volatility tracking; stochastic jump processes for limit-order books and broader market indicators; and options markets * Practical applications using real-world data to help readers better understand the presented material The Handbook of High-Frequency Trading and Modeling in Finance is an excellent reference for professionals in the fields of business, applied statistics, econometrics, and financial engineering. The handbook is also a good supplement for graduate and MBA-level courses on quantitative finance, volatility, and financial econometrics. Ionut Florescu, PhD, is Research Associate Professor in Financial Engineering and Director of the Hanlon Financial Systems Laboratory at Stevens Institute of Technology. His research interests include stochastic volatility, stochastic partial differential equations, Monte Carlo Methods, and numerical methods for stochastic processes. Dr. Florescu is the author of Probability and Stochastic Processes, the coauthor of Handbook of Probability, and the coeditor of Handbook of Modeling High-Frequency Data in Finance, all published by Wiley. Maria C. Mariani, PhD, is Shigeko K. Chan Distinguished Professor in Mathematical Sciences and Chair of the Department of Mathematical Sciences at The University of Texas at El Paso. Her research interests include mathematical finance, applied mathematics, geophysics, nonlinear and stochastic partial differential equations and numerical methods. Dr. Mariani is the coeditor of Handbook of Modeling High-Frequency Data in Finance, also published by Wiley. H. Eugene Stanley, PhD, is William Fairfield Warren Distinguished Professor at Boston University. Stanley is one of the key founders of the new interdisciplinary field of econophysics, and has an ISI Hirsch index H=128 based on more than 1200 papers. In 2004 he was elected to the National Academy of Sciences. Frederi G. Viens, PhD, is Professor of Statistics and Mathematics and Director of the Computational Finance Program at Purdue University. He holds more than two dozen local, regional, and national awards and he travels extensively on a world-wide basis to deliver lectures on his research interests, which range from quantitative finance to climate science and agricultural economics. A Fellow of the Institute of Mathematics Statistics, Dr. Viens is the coeditor of Handbook of Modeling High-Frequency Data in Finance, also published by Wiley.
Publication Date: 2016
Encyclopedia of Quantitative Finance [E-Resource] "What initially looked like an impossible undertaking has become a formidable achievement, stretching from the theoretical foundations to the most recent cutting edge methods. Mille bravos!" -Dr Bruno Dupire (Bloomberg L.P.) The Encyclopedia of Quantitative Finance is a major reference work designed to provide a comprehensive coverage of essential topics related to the quantitative modelling of financial markets, with authoritative contributions from leading academics and professionals. Drawing on contributions from a wide spectrum of experts in fields including financial economics, econometrics, mathematical finance, operations research, numerical analysis, risk management and statistics, the Encyclopedia of Quantitative Finance faithful reflects the multidisciplinary nature of its subject. With a pool of author comprising over 400 leading academics and professionals worldwide, the Encyclopedia provides a balanced view of theoretical and practical aspects of quantitative modelling in finance. Topics covered in the Encyclopedia include the historical development of quantitative modelling in finance, including biographies of influential figures self-contained expositions of mathematical and statistical tools used in financial modelling authoritative expositions on the foundations of financial theory and mathematical finance, including arbitrage pricing, asset pricing theory, option pricing and asset allocation comprehensive reviews of various aspects of risk management: credit risk, market risk, operational risk, economic capital and Basel II with a detailed coverage of topics related to credit risk up-to-date surveys of the state of the art in computational finance: Monte Carlo simulation, partial differential equations (PDEs), Fourier transform methods, model calibration detailed entries on various types of financial derivatives and methods used for pricing and hedging them, including equity derivatives, credit derivatives, interest rate derivatives and foreign exchange derivatives pedagogical surveys of econometric methods and models used in finance, including GARCH models, GMM, realized volatility, factor models, Mixed Data Sampling and high-frequency data empirical and theoretical aspects of market microstructure and trade-level modelling timely entries on new topics such as commodity risk, electricity derivatives, algorithmic trading and multi-fractals quantitative methods in actuarial science, including insurance derivatives, catastrophe bonds , equity-linked life insurance and other topics at the interface of finance and insurance All articles contain are cross-referenced to other relevant articles in the Encyclopedia and include detailed bibliographies for further reading. The scope and breadth of the Encyclopedia will make it an invaluable resource for students and researchers in finance, quantitative analysts and developers, risk managers, portfolio managers, regulators, financial market analysts and anyone interested in the complexity of today's financial markets and products.
Publication Date: 2010

Speculation & Financial Risk-Taking

Speculative Market Practices

Terminology Related to Speculative Market Practices

Financial Speculation -- Streaming Online Video Examples

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Books, E-Books & Other Resources -- Speculative Markets

Related Subject Headings

Quantitative Finance

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