Speculators – Innocent Devil or Guilty Angel

Hj Samson Sameon , a retired civil servant, who had just performed the Haj 7 times, is planning to conduct his seasonal business, which he had done for years, that’s selling sacrificial livestock for the Idul Adha season.

Anty Chorupsy, Hj Samson’s beloved daughter, wants to please her old man by providing a working capital worth IDR 80 million. That’s her commission received as an Accounts Executive working in a futures broker in Jakarta.

Hj Samson did not approved his only child’s chosen career, his reasoning is that futures trading is gambling. On the other hand, Anty’s argument is that futures trading is an endevour that requires knowledge, skills and discipline in order to succeed. Within 4 months, Anty , only a high school graduate, read books, attended trainings to upgrade her skills. Being an affable person, she befriended some Traders/Trainers to widen her knowledge.

Both Hj Samson and Anty are in the same position, as speculators, the difference is the markets. Hj Samson deals in the physical market, whereas Anty in the futures market which has a global reach and participation. Speculators exist everywhere, the term Bang Ijon, is a speculator that thrives in the physical agri business by providing capital to farmers, but in return, the farmers can only sell their produce to and at a price determined by Bang Ijon.

Anty speculates in the futures market, which, in the beginning is done through a futures exchange, but with the development of technology, futures trading become an OTC-over the counter product, which became much easier and cheaper to trade.

Three weeks prior to Idul Adha, Hj Samson and his crew were setting up shop at the usual walkway along Jl Tanah Abang, the location that he used for years. But this time something is amiss. Then came a group of Vigilante Corps approach Hj Samson, the Team Leader, heavy heartedly told  them to clear the area. Arguments and lip boxing ensued, but Hj Samson give in after he was shown the new Directive issued by the new Governor. Like it or not, Hj Samson had to relocate to a site which has been prepared by the local authority, which many agree that its far from the crowd and definitely very quiet.

Speculators in the physical market are exposed to multiple risks especially from “street regualtions” which requires more muscles than membrane. Its also  breeding ground for thugs and gangsterism. Speculators in the futures market have a different way of life. Speculator or trader needs to be knowledgeable with the required analytical skills to determine when to trade and which strategy to apply. The regulations in the futures market are also very clear and institutionalized to the extent that risks can become minimized and manageable.

The Futures Exchange is where producers and consumers come together to buy and sell from each other. Producers, by nature, would want to sell at the highest possible price, whereas, consumers would want to buy at the lowest possible price. Then comes a third group, the referee, the speculators. Speculators trade by utilizing the difference in running prices. The “Price Discovery Mechanism” will work fairly when this third group are in the market.

What happen to Hj Samson livestock business?

The site which was prepared by the local authority did not bring good fortune. Hj Samson only sold 2 goats, and he has to continue to feed the remaining 23 goats. After the Idul Adha season, the site has to be cleared, which adds another 7 winds of headache, as to where to place the unsold goats.

Anty is saddened but elated at the same time, because he father admitted defeat. Anty’s activity needs hard work, analising market movement requires skills and discipline, though, she may not sweat but, it drains mental energy all the same.

Speculating done by Hj Samson resulted in a loss because he expected things to be the same as the previous years. Unfortunately, the new local authority does not want to turn Jakarta into a livestock market which are unsightly and smelly.

Both of Hj Samson and Anty were doing the same thing, sourcing for profits but from different markets. One, in the shadowy physical market, the other in the futures market, with all the regulations to keep in check, fair price discovery. Both are speculators.

Speculators – Innocent Devil, or, Guilty Angel?