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 stock market 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.
A bullish market is one that is rising and a bearish market is one that is falling. A bull is an optimist who thinks prices will rise and a bear is a pessimist who thinks prices will fall. To learn more about the movement check out the Bullish & Bearish volumes.
Bear Came First
So which came first – the bulls or the bears?
According to people who research this type of thing, the term “bear market” 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 market” and was applied to stock being sold by a speculator.
The terms bulls and bears in the stock market 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.
The terms bull vs bear market 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.
Knowing the difference between a bull and bear market is great, but you need to know the stock trading strategies, stock market tips and tactics that the professionals use to make money in each kind of market.
So what do you think today’s market is – a bull or a bear? Leave your comment below!