Investment and Speculation in Managed Futures

February 7, 2022
by Noriyuki Morimoto

Futures are objects of speculation on the one hand, but on the other hand, they are extremely important hedging instruments for producers of crops and mineral resources whose prices are highly volatile, and for those who engage in foreign exchange transactions for payments in international trade.

In the futures market, there are hedging transactions by those dealing in real commodities such as agricultural products, mineral resources, and foreign exchange, as well as speculative transactions by investors who seek to make profits by capitalizing on large price fluctuations. It is precisely because the two collide head-on that deals can take place.

In fact, if there were only hedging intentions, everyone would be selling, and no hedging transaction would be completed. Only when there is speculative money to buy into the selling of hedges can a deal be made.

Hedge selling based on necessity by industries collides head-on with speculator buying. When completely different intentions and interests collide in the market, a particular wave occurs in the price fluctuation of futures. Managed futures is an investment strategy that uses advanced statistical methods to identify such waves and predict the price movements of futures.

Managed futures is not just speculation that predicts price changes, but is an investment that uses scientific methods. It is a form of investment that takes advantage of speculation.


[Category /Strategic Investment]

Noriyuki Morimoto
Noriyuki Morimoto

Chief Executive Officer, HC Asset Management Co.,Ltd. Noriyuki Morimoto founded HC Asset Management in November 2002. As a pioneer investment consultant in Japan, he established the investment consulting business of Watson Wyatt K.K. (now Willis Towers Watson) in 1990.