The terms “bear” and “bull” are frequently used to describe general actions and attitudes, or sentiments, of a specific asset or the market as a whole. Investors use the terms “bearish” and “bullish” to express their market sentiment toward specific securities or financial markets.
A bear market is characterized by a price decline, usually lasting a few months, in a single security or asset, a group of securities, or the securities market as a whole. A bull market, on the other hand, occurs when prices rise. Typically, a move of 20% or more from a recent peak or trough signals the start of an “official” bear or bull market. You can click here to know more about wholesale meaning.
- A bull market is one that is on the rise and is economically sound, whereas a bear market is one that is declining, with most stocks losing value.
- The origins of these expressions are unknown, but one possibility is the attack of that bull by raising their horns, whereas bears attack by swiping their paws downward.
- A second explanation concerns early stock market participants and how they might benefit from an up or downtrend.
Where Did the Terms “Bulls” and “Bears” Originate?
While the terminology is straightforward, the impact of a bull or bear market on your portfolio and wealth is undeniable. Both animals are known for their incredible and unpredictable strength, so the image that each evokes in terms of stock market volatility is unmistakably accurate.
Surprisingly, the actual origins of these expressions are unknown. Here are two of the most common explanations:
The terms “bear” and “bull” are thought to derive from how each animal attacks its adversaries. That is, a bull will raise its horns into the air, whereas a bear will lower its horns. These actions were then metaphorically linked to market movement. A bull market was defined as an upward trend. It was a bear market if the trend was downward.
Historically, middlemen in the sale of bearskins would sell skins that they had not yet received. As a result, they would speculate on the future purchase price of these trapper skins, hoping for a drop. The trappers would profit from the spread, which is the difference between the cost and selling prices.
These middlemen were dubbed “bears,” short for bearskin jobbers, and the term stuck to describe a market downturn. In contrast, because bears and bulls were widely thought to be polar opposites due to the once-popular blood sport of bull-and-bear fights, the term bull stands in for bears.
When discussing financial markets, however, the term “bull” has a much more positive connotation than “bear.” A bull market and a bull (or “bullish”) speculator are speculative purchases made with the expectation that stock prices will rise.
This connection to speculation appears to have its roots in the gruesome bloodsports of bull and bear-baiting. These competitions first appeared in medieval times, around the 1200s, and peaked in popularity during the Elizabethan era. People would flock to the events and bet large sums of money on the outcome of a contest involving a bull or a bear. It’s easy to see how this corresponds to how the terms are used in today’s stock market speculation. Know more about top clothing brands in india here.