Speculators often get a bad rep, especially when headlines report a crash in stocks, a spike in oil prices, or a currency's value is shattered in short order. This is because the media often confounds speculation with manipulation.

Why is speculation a problem?

The major problem with speculation, besides it being non-productive, is that allows the possibility of price manipulation. If prices are manipulated we are no longer operating in competitive market. The market has been corrupted to favor those who control the prices.

Why is over speculation bad?

When this relationship is disrupted because of inadequate regulation, excessive speculation undermines the ability of the market to provide its vital functions for the real economy – driving prices too high, but simultaneously reducing (rather than increasing) supply, creating volatility that makes it more difficult, ...