How Did Markets Get "Bearish" and "Bullish"?
A "bear market" is one where stock prices fall, and a "bull market" is one where prices rise. But why do financial folks talk about "bears" and "bulls"? The public radio show Marketplace looked into various origin stories and called on our own Ben Zimmer to explain the history.
In the piece, Marketplace reporter Sabri Ben-Achour first explored some of the odder theories about where "bear" and "bull" markets come from:
Gory Disembowelment Theory
In this, the most commonly heard theory, the terms come from the two animals' methods of attack. A market where prices are going up is called a bull market because a bull will lower his horns and toss his enemy up.
A market where prices are going down is called a Bear market because the bear (allegedly) swipes down to kill his prey.
The Bulletin Board Theory
Canadian Tech Blogger Nick Waddel dug up this apocryphal explanation. The story goes that in the early days of the London Stock Exchange, people used to post offers to buy stocks on bulletin boards. "When the offers were abundant, the board was full of bulletins – later shortened to bull. When the offers were scarce, the exchange was bare of offers and that term evolved into bear," says Waddell -- who isn't convinced of this one himself but he likes it anyway.
The Theory That Has Any Actual Evidence
All of the above theories are wrong. Or, at least, totally unproven, according to Wall Street Journal language columnist Ben Zimmer, who is also a producer for Vocabulary.com.
"People like coming up with theories," he says, "especially when it's something like bull or bears and it's not immediately obvious why we should be using these terms."
Bravado and Bear Skins
He says the term Bear Market (stocks going down) most likely comes from an old saying:
"Don't Sell the Bear Skin Before You've Caught the Bear" – a little bit like today's "don't count your chickens before they hatch."
Because back in the early 1700's, that's kindof what some traders started doing.
"There were a lot of speculators engaging in what we'd now call shortselling," says Zimmer. "They were selling stocks they don't yet own, with the expectation that by the time it was due for delivery, that the price would fall before then, and the speculator would make a profit." ...
"That was called selling the bear skin, based on the old proverb," says Zimmer. A person who practiced this was called a "Bear Skin Jobber," which was shortened to "Bear". Eventually, markets that were conducive to this practice – where prices were falling – were called Bear markets.
"So we have a pretty good idea of the bear part of bull and bear, but the bull is more mysterious," says Zimmer.
You can read the whole online version here, and listen to the audio version that ran on Marketplace.