A:

First of all, let's remember that bears are sluggish and bulls spirited and burly. The terms are used to describe general actions and attitudes, or sentiment, either of an individual (bear and bull) or the market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.

The actual origins of these expressions are unclear. Here are two of the most frequent explanations given:

  1. 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; if the trend was down, it was a bear market.
  2. 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. These middlemen became known as "bears", short for bearskin jobbers, and 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.

    (For further reading, see Surviving Bear Country and Digging Deeper Into Bull And Bear Markets, as well as The Bulls, The Bears and The Farm.)

RELATED FAQS
  1. Are we in a bull market or a bear market?

    A bull market is represented by a rising price trend, and a bear market is indicated by a falling price trend. Given this ... Read Answer >>
  2. What are the signs of a bear market rally?

    Read about some of the signs of a bear market rally, an unpredictable bull movement that takes place in the middle of a stronger ... Read Answer >>
  3. What is a common strategy traders implement when using the Elder-Ray Index?

    Read about the important buying and selling conditions that are recommended by Dr. Alexander Elder when using his Elder-Ray ... Read Answer >>
  4. What types of securities perform best in a bull market?

    Read about the types of securities, such as stocks or ETFs, that tend to post the largest gains when the economy is enjoying ... Read Answer >>
Related Articles
  1. Investing

    How To Adjust Your Portfolio In A Bear Or Bull Market

    While investors shouldn’t feel compelled to change their portfolios radically overnight in reaction to the market's daily moves, small adjustments in the face of a bull or bear market could be ...
  2. Investing

    What Does the Bull Market Anniversary Mean to You?

    Bull and bear markets shouldn't really matter to long-term investors.
  3. Investing

    Prospering In The Next Bear Market: Here's How

    Prepare to survive, and even prosper, in the impending bear market, by considering and putting into action the following four strategies.
  4. Trading

    Triple Screen Trading System - Part 4

    How can a trader use the Elder-Ray oscillator as the second screen of this system? Find out here.
  5. Investing

    The Wall Street Animal Farm: Getting To Know The Lingo

    Finance professionals speak a different language, but the terms they use are more familiar than you think.
  6. Financial Advisor

    Preparing Your Clients for the Next Bear Market

    It has been almost six years since the last bear market, so it might be time for advisors to start preparing their clients for the inevitable downturn.
  7. Trading

    Profiting In Bear And Bull Markets

    There are many ways to profit in both bear and bull markets. The key to success is using the tools for each market to their full advantage.
  8. Investing

    4 Small-Cap Core ETFs for Bull and Bear Markets (DGRS, IJR)

    Learn about the state of U.S. small-cap stocks and four ETFs to consider for returns during a bull or bear market in small-cap stocks.
  9. Investing

    Don’t Panic When the Next Bear Market Happens

    Take advantage of the next bear market and watch your investment in great companies grow.
RELATED TERMS
  1. Bull Position

    A long position in a financial security, such as a stock in the ...
  2. Bear Market Rally

    A period in which prices of stocks increase during a bear market. ...
  3. Bear Position

    Alternate term for a short position in a financial security. ...
  4. Bear Closing

    Purchasing a security, currency, or commodity in order to close ...
  5. Bear Fund

    A mutual fund designed to provide higher returns when the market ...
  6. Gold Bull

    A slang term for a market or investor who is bullish on gold. ...
Hot Definitions
  1. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  2. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  3. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  4. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  5. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  6. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
Trading Center