What Do Bears And Bulls Have To Do With Our Investments?
Stock markets rallied Friday, but the year hasn't started off so great for Wall Street. The Dow Jones industrial average was down more than 500 points for a bit on Wednesday, the Standard & Poor's 500 index has dropped about 7 percent this month and markets around the world have lost trillions(!) of dollars in value.
Some experts predict we are headed for — if not already in — a bear market, or one in which prices are falling and investors start selling aggressively.
But, let's explore something else: Why do we use a bear and a bull to describe the stock market's ups and downs?
Turns out, finding an answer to that question can be a bear.
A quick Google search turned up an entry on Investopedia, which referenced bull-and-bear fights:
"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."
Zimmer offered up an explanation similar to Investopedia for why we might use bear, but said the bull part of "bull and bear" is more mysterious.
Chris Meyers, director of education for the Museum of American Finance, says there is no explanation.
"Nobody really knows," he says.
Most people believe the terms are used because the bull attacks by charging with its horns and thrusting them upward, and the bear attacks by swiping its paws downward.
"There's really no direct attribution that's available, and so it's one of these sort of cultural phenomenons," Meyers says. "Obviously it's endured and the explanation is pretty much universal at this point."
Anybody else thinking about the old Saturday Night Live skit right now?
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