Terminology used by stock brokers and Wall Street insiders tends to be rather complicated what with jargon such as margins, small cap, and indices, it can be difficult to tell what the devil these people are talking about. Still, the most basic of stock market terms, "bull" and "bear," date back to the 19th century and are not tied to any complicated mathematical analysis.
While the origin of the terms might be somewhat vague, their definitions are quite precise. "Bull" refers to an investor who believes that a market or individual stock issue will rise in value. A "bear" is someone who believes the opposite, that the market or stock will drop in value. Generally, a rise or fall of 20 percent is the benchmark for describing a bull or bear market.
Bear Came First
According to people who research this type of thing, the term "bear" came first and dates back to the 17th century from the proverb that it was unwise "to sell the bear's skin before one has caught the bear." By the 18th century, the term "bear skin" was shortened to the familiar "bear" and was applied to stock being sold by a speculator. The term came into common usage among financiers in 1720 during a financial scandal known as the "South Sea Bubble" that revolved around a speculative investment scheme involving the South Sea Company.
Enter the Bull
This was about the same time the term "bull" made its debut, which originally referred to a speculative purchase of stock on the expectation that it would rise. The earliest recorded use of the term dates back to 1714. It is thought the term gained favor because of its relationship to the other animal term "bear."
The use of the two terms also has roots in English hunting culture and the expressed characteristics of the two animals. Bulls were known to be animals that are aggressive and bold, unafraid to charge ahead. On the other hand, the bear is a creature that is much less outwardly aggressive and tends to hide from it perceives to be approaching danger.
The Bull vs Bear
In a tradition that dates back 150 years to the California gold rush, a
bull and a bear were thrown into a ring to do battle as entertainment
for the miners. The modern "miners" in this spectacle were a group of
stockbrokers and financial service professionals from the United States
and Canada. The furry critters providing the entertainment were two
widely followed stock market prognosticators - one an unapologetic bull
and the other an unabashed bear.
Personalities
The terms are used to describe market conditions and also to characterize particular analysts and brokers. On Wall Street it generally is considered to be "cool" to be known as a bull, someone who is optimistic about the future of the market. Those with a more conservative approach to investing inherit the general moniker of being bears.
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