Know Your Financial Lingo- What are Bull and Bear Markets?
Sep 10, 2021
Common terms used to describe the positive appreciating, or negative depreciating market conditions of financial markets are Bull Market or Bear Market. These can impact the performance of an investor's portfolio and their investing decisions.
What’s a Bull Market?
A bull market is a market condition where prices are rising or are expected to rise. These terms most often are used to refer to the stock market but can be applied to anything that is traded, such as bonds, real estate, currencies, or commodities.
The term bull market is typically reserved for extended periods in which a large portion of security prices are rising. Bull markets can last for months or even years.
What’s a Bear Market?
The opposite of a bull market is a bear market, characterized by falling prices and typically shrouded in pessimism. Bear markets can also last for extended periods of time.
Where did These Terms Come From?
The commonly held belief about the origin of these terms suggests that the use of "bull" and "bear" to describe markets comes from the way the animals attack their opponents. A bull thrusts its horns up into the air, while a bear swipes its paws downward. These actions are metaphors for the movement of a market. If the trend is up, it's a bull market. If the trend is down, it's a bear market.