When you hear the terms bull and bear in financial news, it is easy to forget these words once represented actual animals.
Their use in market language is deeply rooted in both history and metaphor.
One popular theory is based on the way bulls and bears attack. A bull thrusts its horns upward, symbolizing a market where stock prices are rising, creating optimism and opportunity for investors.
On the other hand, a bear swipes its paws downward, which reflects a market where prices are falling, signalling fear and caution.
This metaphor remains an easy way to remember that in a bull market, prices climb and in a bear market, they decline.
The origins of "bear" date back to the 16th century. Bear skin traders would sell skins they did not yet own, speculating that prices would drop, similar to today’s short sellers.
The term “bear” became synonymous with pessimism in the market. In contrast, bull-baiting and bear-baiting contests in England during the 16th and 17th centuries may have contributed to the opposing symbolism.
These brutal contests, where bulls and bears fought for entertainment, likely reinforced the animals as symbols of contrasting market trends.
These contests drew large crowds, who bet on the outcome. This opposition between the animals contributed to their roles as market metaphors for rising and falling prices.
Today, the bull is a more positive symbol. One famous example is the Charging Bull statue in New York’s Financial District.
Installed in 1989 after the 1987 stock market crash, the bronze statue has become a symbol of financial strength. Tourists even rub the bull’s horns for good luck with their investments!
While the terms have evolved, bulls and bears remain central to market language, representing the ongoing push and pull of optimism and caution.
Today, market analysts use more specific definitions. A bull market refers to prices rising by at least +20%, while a bear market reflects a drop of -20% or more.
Whether these terms conjure images of animals or not, the bulls and bears are here to stay in our financial lexicon, representing the constant push and pull of market forces.
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