Do you know how the phrase 'bull and bear markets' came about?
This phrase describes markets in which share prices are, respectively, rising and falling. It is easy to understand how a bull market has come to mean a market whose price is on the up: the bull, an aggressive animal, is a great metaphor for that which is confident and agressive.
However, it is more difficult to see how bears come into the scenario. After all, bears are ferocious and predatory. The origin relates to their skins. A hunter would often recieve payment for a bearskin before he had hunted and killed it. This type of sale, where the price is fixed before the goods are received, is now called short selling, and it is this kind of sale that is most common during a bear market: if a trader can fix a price before the shares are sold, it is likely that, by the time the shares are handed over, the price will have dropped.
Extracted from March Hares and Monkey's Uncles by Harry Oliver.
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