What was a danger of stock speculation?

Answer 1

A danger of stock speculation is that it can lead to significant financial losses for investors, especially when they engage in high-risk trades without fully understanding the underlying assets. Speculative bubbles can form, causing stock prices to soar beyond their intrinsic value, eventually leading to a sharp market correction. This volatility can destabilize not only individual portfolios but also the broader economy, as widespread losses can erode consumer confidence and lead to reduced spending. Furthermore, excessive speculation may encourage unethical practices and market manipulation.