The most common explanation given to economic students is theoretical and relevant to basic rationality:
* investors who are speculative have no interest to become long-term focused, while
* a long-term focused investor who, say, owns a great but over-priced stock has interest in selling it expecting to buy it back afterwards, and then bring it to its long-term value;
* similarly, a long-term investor who sees two company would rationally prefer a average but underpriced stock over a great, but already high one if he expects a higher value.
Because short term always precedes long, considering speculation is rational for either type of investor.
You can check chapter 10 and 11 of Keynes' General Theory… if you want a very detailed personal account of those.(Keynes was the best speculator of his time, and make Cambridge King's College immensely rich doing so.)
You can check chapter 10 and 11 of Keynes' General Theory… if you want a very detailed personal account of those.(Keynes was the best speculator of his time, and make Cambridge King's College immensely rich doing so.)