Boiling Down Bull and Bear Markets
You may have heard people talk about bull markets and bear markets or even use the term to describe how they feel about investing. You may hear people say, “I am feeling bullish” or “I am feeling bearish, but what exactly are they talking about?
While the actual reason behind why bulls and bears have become synonymous with investing is unclear; history is full of folklore on why this association has been made over time. One theory is that the bear representation comes from bearskin traders who would sell bearskins prior to receiving them from trappers in hopes that the future prices would drop and result in a bigger profit. Bulls were considered the opposite to bears, stemming back to medieval times where blood sports pitted the bear against the bull in a battle to the death.
Let’s break it down because once you know, it is easy to remember the difference and you can even begin to use these terms in your own conversations. The terms “bull” and “bear” are thought to come from how these animals attack their opponent.
A bull attacks with its horns and pushes its opponent upward. Therefore, a bull market is a market that is going up. If market enthusiasm has got you excited, you are bullish. You are optimistic that the market will continue to go up.
On the other hand, when a bear attacks, it claws its victim downward. Therefore, a bear market is going down. If you find yourself feeling pessimistic then you are bearish and you are expecting the market to drop.
While we many never know the exact origin of the terms bull and bear markets, they will continue to be commonly mentioned in the world of investing.
Client Experience Manager, Investment Advisor Representative
Rebecca joined the Advisors Management Group in 2011 as an Investment Advisor Representative. Rebecca brings a great deal of experience to the team having worked for several years at Marshall & IIsley Bank and MetLife.