The Fool FAQ

Bulls and Bears

The Fool FAQ

The symbols don't seem to match--why not a bird market when it soars and a badger market when it tanks?

Birds and badgers? Not bad, but we seem to be stuck with bulls and bears--at least it's better than the Democrats--they got stuck with a donkey!

One common myth is that the terms "bull market" and "bear market" are derived from the way those animals attack a foe, because bears attack by swiping their paws downward and bulls toss their horns upward. This may be a useful way to remember which is which, but it is not the true origin of the terms.

Long ago, "bear skin jobbers" were infamous for selling bear skins that they did not own; i.e., the bears had not yet been caught. This term eventually was used to describe short sellers, speculators who sell shares that they do not own, hoping to buy them after a price drop and then deliver the shares to the owner. Obviously, these "bears" were hoping the market would go down.

Because bull and bear baiting were once popular sports, "bulls" came to be seen as the opposite of "bears." The bulls were those people who bought in the expectation that a stock price would rise, not fall.

Cartoonist Thomas Nast popularized the Bull and Bear as symbols for the market's movement. But perhaps the final word on bulls and bears is the old Wall Street adage: Bulls make money, bears make money, pigs get slaughtered. Don't get greedy!