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Why do they call the stock market a "bull" market when rising, and a "bear" market when down?
Stockbroker Matt:
When the stock market is rising, they call it a "bull" market, right? And when it falls, it's a "bear" market, is it not? WHY? I can see maybe that a bull is powerful and charges toward you, so that makes sense for a market that is going up. But a bear, I believe, is even more powerful than a bull. What's the deal with the bull/bear thing anyway?
-- Hob Pinkerton, National City
The late-'90s technobubble was mostly bull, and now we can't bear to look at our 401k's. That's what it means today, from this side of the trading floor. But to find the origins, we'll have to travel back, back, back to London in the 1700s. Hey! Let's use this great GloboRobo time machine from HerbandHank.com, a little Sorrento Valley start-up hoping to make its IPO next week; ticker symbol: HAHA.
Even in the 18th Century, businessmen had their own annoying insider vocabulary. In 1700s bizspeak, a bull was a stock trader who wagered that the price of his particular favorite would rise. Buy today, sell tomorrow, get rich. The bull's opposite, the bear, bet that prices would go down. Bears made money by promising future delivery of stock they didn't actually own at the time they made the promise.
F'rinstance, Dame Edna, our bear, believes that stock in her cousin's coal mine is going to tank. The stock's value on Wednesday is 10 pounds a share. She enters into a contract that day with Sir Mothred to sell 100 shares of coal mine stock to him the following Monday at the current price that Wednesday, making the contract value 1000 pounds. Sir Mothred has heard rumors that they'd found diamonds in that mine, so he's betting the stock will go through the thatched roof, and 1000 pounds next Monday will be a bargain. Besides, Dame Edna's a girl; what can she know?
On Friday Dame Edna's cousin's mine fills up with water. By Monday the stock price is 1 pound a share. Dame Edna pays 100 pounds for the 100 shares, delivers them to Sir M, who must pay her 1000. If he'd been right about the diamonds and the price on Monday had doubled, Dame Edna would be the one taking it in the shorts. But, naturally, it was her cousin's mine, so she already knew about the leak. And she was the one who started the rumor about diamonds. Insider trading and disinformation are also not new.
Word-origin geeks are pretty sure the "bear" part comes from a popular expression of the day: Don't sell the bearskin before you've caught the bear (don't count your chickens before they've hatched). Stock-trading bears are in the business of promising to sell things they don't have, so that's a pretty logical fit. The bull part, well, nobody's positive, but most assume as you do that it's the aggressive, charge-ahead behavior of a bull that gave bull traders their name. And can the elves and I interest you in a sweet little deal on another dot-com, Genintel Micromanagement Ecommerce? We're not exactly sure what the product is, but the ticker symbol is GIMME.
Here's something you might be interested in.
Why do they call the stock market a "bull" market when rising, and a "bear" market when down?
Why do they call the stock market a "bull" market when rising, and a "bear" market when down?
Stockbroker Matt:
When the stock market is rising, they call it a "bull" market, right? And when it falls, it's a "bear" market, is it not? WHY? I can see maybe that a bull is powerful and charges toward you, so that makes sense for a market that is going up. But a bear, I believe, is even more powerful than a bull. What's the deal with the bull/bear thing anyway?
-- Hob Pinkerton, National City
The late-'90s technobubble was mostly bull, and now we can't bear to look at our 401k's. That's what it means today, from this side of the trading floor. But to find the origins, we'll have to travel back, back, back to London in the 1700s. Hey! Let's use this great GloboRobo time machine from HerbandHank.com, a little Sorrento Valley start-up hoping to make its IPO next week; ticker symbol: HAHA.
Even in the 18th Century, businessmen had their own annoying insider vocabulary. In 1700s bizspeak, a bull was a stock trader who wagered that the price of his particular favorite would rise. Buy today, sell tomorrow, get rich. The bull's opposite, the bear, bet that prices would go down. Bears made money by promising future delivery of stock they didn't actually own at the time they made the promise.
F'rinstance, Dame Edna, our bear, believes that stock in her cousin's coal mine is going to tank. The stock's value on Wednesday is 10 pounds a share. She enters into a contract that day with Sir Mothred to sell 100 shares of coal mine stock to him the following Monday at the current price that Wednesday, making the contract value 1000 pounds. Sir Mothred has heard rumors that they'd found diamonds in that mine, so he's betting the stock will go through the thatched roof, and 1000 pounds next Monday will be a bargain. Besides, Dame Edna's a girl; what can she know?
On Friday Dame Edna's cousin's mine fills up with water. By Monday the stock price is 1 pound a share. Dame Edna pays 100 pounds for the 100 shares, delivers them to Sir M, who must pay her 1000. If he'd been right about the diamonds and the price on Monday had doubled, Dame Edna would be the one taking it in the shorts. But, naturally, it was her cousin's mine, so she already knew about the leak. And she was the one who started the rumor about diamonds. Insider trading and disinformation are also not new.
Word-origin geeks are pretty sure the "bear" part comes from a popular expression of the day: Don't sell the bearskin before you've caught the bear (don't count your chickens before they've hatched). Stock-trading bears are in the business of promising to sell things they don't have, so that's a pretty logical fit. The bull part, well, nobody's positive, but most assume as you do that it's the aggressive, charge-ahead behavior of a bull that gave bull traders their name. And can the elves and I interest you in a sweet little deal on another dot-com, Genintel Micromanagement Ecommerce? We're not exactly sure what the product is, but the ticker symbol is GIMME.
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