Where Did the Bull and Bear Market Get Their Names?

The terms "bear" and "bull" are often used to describe general actions and attitudes, or sentiment, either of an individual asset or the market as a whole. 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. Typically, a move of 20% or more from a recent peak or trough triggers an "official" bear or bull market.

Where Did "Bulls" and "Bears" Come From?

While the terms are relatively simple to understand, the impact either 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.

Interestingly enough, 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.

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.' By the eighteenth century, the term bearskin was being used in the phrase 'to sell (or buy) the bearskin' and in the name 'bearskin jobber,' referring to one selling the bearskin."

Over time the name "bearskin jobber" was shortened to just "bear," and the definition was expanded to include the financial markets, which used "bear" to describe a speculator selling stock. One of the earliest references of the term "bear" used to describe a marketplace transaction came in 1709 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."

This negative image of the bear continues in Daniel Defoe's The Political History of the Devil published in 1726. In the book, Defoe writes "...every dissembler, every false friend, every secret cheat, every bear-skin jobber, has a cloven foot."

Literary Evidence for Bull

In contrast, when used to discuss the financial markets, the term "bull" has a much more positive connotation than "bear." A bull market and a bull (or "bullish") speculator refers to speculative purchases made with the expectation of an increase in stock prices.

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 1200s and reached their height of popularity during the Elizabethan era. 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." In Much Ado About Nothing, the bull is a savage but noble beast:

"I think he thinks upon the savage bull.

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."