|
How did these terms, "bull market" vs. "bear market," originate and what can they tell us about what to do in the stock market? While the first meanings of both terms are obscure, it may be that a "bear market" was first noted when there was a thriving fur trade, and specialists in bear pelts had too many to unload and so wanted to sell a lot of them in a hurry, anticipating that their prices would soon decline, which, indeed, was sure to happen if there were many more sellers than buyers.
The name "bull" applied to a financial market, on the other hand, may well pre-date the use of bear for the opposite type of securities trading. As a bull has for millennia meant an animal that is very strong, often aggressive, and the most superior of which are also good at reproducing themselves, thus especially worthy of being bred for further strength and reproduction, it might reasonably be assumed that folks who hoped for similar results from their investments would have optimistically equated upward price surges with bulls' great strength and virility.
Another speculation is that the idea of bull vs. bear markets, meaning upward vs. downward trending fluctuations in a stock price or in multiple stocks' prices, came into common usage to liken them to the wagering that was done related to bull vs. bear fights. If one favored one animal over the other, he or she might then come to be called a bull or a bear, respectively.
It makes a kind of sense if one thinks of bulls as charging ahead and having upward angled horns, which they try to drive from low at first suddenly up into their opponents, hoping to damage vital organs, but bears as having a greater capacity to strike downward, from a more stationary reared up position, using savage attacks with their claws and teeth.
| |