When is Speculation a Positive Sum Game?

Participants in any particular asset market do well to ask themselves (every so often, not continuously!) why they are participating. In the previous chapter we saw how sometimes it is entirely rational to decide in favour of exiting a particular market. A rational exit occurs in the case of hot or cold markets where the individual concerned is not mesmerized by the dominant scenario and yet does not view a sufficiently favourable risk-reward ratio from speculating on an ultimate temperature shift (back into the temperate zone). In warm markets an example of a rational exit is the selling out by the more conservative investors (reticent about accepting the full implications broadcast for the speculative displacement in the process of discovery) to the bold (not necessarily wise!) vanguard of investors (who already have jumped the gun in the discovery process). These particular illustrations highlight a general dilemma of whether to be there (in the given market-place) — as a player in the game — or not.