Investors use the terms "bearish" or "bullish" as a quick way to describe their market sentiment regarding specific securities or financial markets.
A bear market refers to a decline in prices, usually for a few months, in a single security or asset, group of securities, or the securities market as a whole. In contrast, a bull market is when prices are rising. Key Takeaways A bull market is a market that is on the rise and is economically sound, while a bear market SMA options strategy a market that is receding, where most stocks are declining in value.
The actual origins of these expressions are unclear, but one reason could be that bulls attack by bringing their horns upward, while bears attack by swiping their paws downward. A second explanation relates to early stock market participants and how they could benefit from either an up or down trend. A secular bull market and a secular bear market are terms used to describe long-term patterns of wealth creation or destruction in a stock market above and beyond regular volatility, especially when accounting for purchasing power changes due to inflation or deflation.
While the terms are relatively simple to understand, the impact what are bears and bulls in trading a bull or bear market can have on your portfolio and wealth is undeniable. Both animals are known for their incredible and unpredictable strength, so the image that each evokes in regards to stock market volatility certainly rings true.
An Overview of Bull and Bear Markets
What are bears and bulls in trading enough, the actual origins of these expressions are unclear. Here are two of the most frequent explanations given: The terms "bear" and "bull" are thought to derive from the way in which each animal attacks its opponents.
That is, a bull will thrust its horns up into the air, while a bear will swipe down. These actions were then related metaphorically to the movement of a market. If the trend was up, it was considered a bull market.
Bulls and bears: The beasts of the finance world
If the trend was down, it was a bear market. Historically, the middlemen in the sale of bearskins would sell skins they had yet to receive. As such, they would speculate on the future purchase price of these skins from the trappers, hoping they would drop. The trappers would profit from a spread—the difference between the cost price and the selling price.
Bull (stock market speculator)
These middlemen became known as "bears," short for bearskin jobbersand the term stuck for describing a downturn in the market. Conversely, because bears and bulls were widely considered to be opposites due to the once-popular blood sport of bull-and-bear fights, the term bull stands as the opposite of bears.
- If you haven't heard of these terms already, you undoubtedly will as you begin to invest.
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Literary Evidence for Bear According to Merriam Webster, the term "bear" came first: "Etymologists point to a proverb warning that it is not wise 'to sell the bear's skin before one has caught the bear. One of the earliest references of the term "bear" used to describe a marketplace transaction came in from Richard Steele, publisher of the British literary and society journal, The Tatler.
In an essay, Steele defines a "bear" as an individual who places a real value on an imaginary object and thus is said to be "selling a bear. In the book, Defoe writes " The Russian bear attacks the Afghan wolf, to the dismay of the British lion and Indian tiger.
Trading 101: What is \
This relationship to speculation seems to have at least partial origins from the gruesome blood sports of bull and bear-baiting. These contests began in medieval times around the s and reached their height of popularity during the Elizabethan era.
Where Did the Bull and Bear Market Get Their Names?
People would flock to the events and gamble on the outcomes, betting vast sums of money on a contest featuring a bull or a bear. It's not hard to see how this corresponds to the usage of the terms in today's stock market speculations. Shakespeare's plays make reference to battles involving bulls and bears. In Macbeth, the ill-fated title character says his enemies have tethered him to a stake but "bear-like, I must fight the course.
The Bulls, the Bears, and the Farm
Tush, fear not, man; we'll tip thy horns with gold And all Europa shall rejoice at thee, As once Europa did at lusty Jove, When he would play the noble beast in love. Jan Cobb Photography Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.
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