Speculators are always at the whim of market selection mechanism because uncertainty can never be eliminated. In other words, speculation is an inherent and continuous feature of the market because of the uncertainty.
“The equilibrium relation between present capital value and actual future rents is only a long-range tendency fostered by the market’s encouragement of successful forecasters. This relation is a final equilibrium, similar to the final equilibrium prices that set the goal toward which the day-to-day prices tend. The price of presently established long-term rents will tend to be equal to the present value of the sum of the expected fluctuating rents for identical goods. The ever-present uncertainty of the future causes the more able forecasters to gain and the less able ones to lose.”
Related:
- Price bridges time
- Equilibrium is never achieved in realityrevisit
- 13-1a3a3 The equilibrium price implies no further changes (the so-called subjective improvements)
- 13-1a3a4 The equilibrium price cannot be realized, except in the evenly rotating economy (ERE)
- 13-1a3a5 The concept of an equilibrium price presupposes a world without further subjective re-evaluations or change
- On success and failure
- On uncertainty
- 13-1a1 The uncertainty of the future must be true because the contrary would completely negate the possibility of action
- 13-1a2 The omnipresence of uncertainty introduces the ever-present possibility of error in human action
- 13-8a2 The demand for money stems from fundamental uncertainty about both the future environment and the future-self
- On speculation