If you watch the stock page of the newspaper, you will often hear the terms bear and bull in relationship to the market. Some of you may or may not know what this means, and many of us have no idea how these two animals become involved in economics.
Traditions say that when the stock price averages are in an upswing, then it is bull market. When it is in reverse and the price averages are going down, then it is a bear market. These terms are mainly used in relationship to the U.S. stock markets. Even in a bull marketplace, you can still have stocks that are plummeting. The term is only relative to the overall market averages.
The first mention of bears in the marketplace actually started in London. In the early 1700s, England’s economy began to struggle due to a large company that went bankrupt. When their stock went belly up, it caused a huge portion of the stock market to crash. During this time of uncertainty, some creative entrepreneurs discovered a way to make the most from selling their product: bear skins. These “bearskin jobbers” would sell the skins when the demand was high even before the bears had been caught. This helped them receive the maximum profit even amid falling prices. The journalists of the time began to describe the downward pressure of this short-selling of bear skins as a “bear market.”
The origins of the bull are not as obvious. There is uncertain history, but speculation is that the bull was commonly seen as an opponent in early animal fighting events against the bear. Additionally, the bull is known to fight by charging and throwing its opponent up into the air with a rising motion.
Whatever their origins, there is no doubt these words are here to stay. The main controversy these days is over what exactly makes it either a bull or a bear market and how the average impacts individual performances.
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