Bulls and Bears

As we mentioned before, the stock market is a place where people can buy and sell shares of companies. Depending on how many people buy and how many people sell these shares in the different companies, the stock market as a whole can go up or down. In fact, the stock market moves through the constant “tug of war” between the buyers and the sellers of shares.

What do they mean by a bull and a bear market? Who are the bulls and who are the bears?

Well, we’re not talking about a street market with stalls selling bears and bulls or a zoo for that matter. The terms bull and bear can be used in two ways. They can be used to describe an investor or they can describe a period of time in the stock market.

Investors who are known as “bulls” are those who are think that the stock market is going up, in other words, they think that business and the economy are getting better and better and that because of this, the price of stocks will get higher and higher. The “bears”, on the other hand, are exactly the opposite. They are more pessimistic about the future and they believe that share prices are going down.

Following from this, the period of time when the stock market is rising is known as a bull market and a bear market is when the market falls.

The story behind the bull and the bear?

The idea behind the term bear originated in the old days, when traders used to sell bearskins before the bear was actually caught. In the stock market, it applies to people who expect prices to fall and the periods of time when share prices actually fall.

The origin of the term bull is less certain. Some refer to bull and bear baiting, which were once popular sports in 16th and 17th century England, where a bull came to mean the opposite of a bear. The idea of the bull could also reflect the fact that bulls usually toss their heads upward.

Now ask yourself, are you a Bull or a Bear??

By Alan Benaim (Investment banker)

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