EspressoLogy

It is not wise to sell the bear's skin before one has caught the bear

— Lorenzo Astemio

The market speaks its own language. As you enter the financial markets, you will hear terms such as Bullish, Bearish, long, short and so on.

When the market sees a prolonged rise in investments or stock prices of around 20% or more, this is known as a Bullish market or the market is in an Uptrend.

Similarly, when there is a prolonged fall in investments or stock prices of around 20% or more, this is known as a Bearish market or the market is in a Downtrend.

Today, let’s focus on the term "Bearish". Varied sources agree that between the Bull and the Bear, the latter came first.

The story takes us back to the late 17^th century, when middlemen used to sell bearskins at higher prices without having actual bearskins with them. The trick was simple: sell bearskins today at a higher price and deliver bearskins on a future date by buying bearskins from the bear-capture at lower prices. This allowed them to make good profits. These middlemen eventually came to be known as bears!

The term gained popularity during one of the world's first huge market crashes, the South Sea Bubble of 1720.

It seems the term Bull has been chosen for its symbolic opposition to the bear, but there is no evidence for this.

As per a second theory, the terms Bullish and Bearish are derived from the way the animals attack. While a bull strikes upwards with its horns (denoting upward movement of prices), a bear strikes downwards with its paws (denoting prices going down).

One more relatively less popular theory is that during the early years of the London Stock Exchange, there would be a filled bulletin board (bulls) during upwards or volatile trends; whereas, when the markets were slow or in a bearish trend, the board would be empty (bare).

(Source and credits: Sites for BSE and NSE, Investopedia, Wikipedia, livemint.com and assorted sources.)