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.

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.

Key Takeaways

  • A bull market is a market that is on the rise and is economically sound, while a bear market is 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.
Secular Bull Market and Secular Bear Market
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. Adam Gault / OJO Images / Getty Images

Where Did Bulls and Bears Come From?

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.

According to MiriamWebster.com, the maker of the dictionaries, the '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." Bearskin was quickly shortened to bear, which was applied to stock that was being sold by a speculator and the speculator selling stock."

I fear the word "bear" is hardly to be understood among the polite people; but I take the meaning to be, that one who ensures a real value upon an imaginary thing, is said to sell a "bear"... 

—Richard Steele, The Tatler, 1709

Thus every dissembler, every false friend, every secret cheat, every bear-skin jobber, has a cloven foot… 

—Daniel Defoe, The Political History of the Devil, 1726

"The term bull originally meant a speculative purchase in the expectation that stock prices would rise; the term was later applied to the person making such purchases. The animal seems to have been chosen as a fitting alter ego to the bear." Thus poet Alexander Pope wrote in 1720:

Come fill the South Sea goblet full;
The gods shall of our stock take care:
Europa pleased accepts the Bull,
And Jove with joy puts off the Bear.