Is it a load of bear or a load of bull?

The major stock markets around the world have had a rough ride this last week. The drop in share prices has been driven by the heavy falls on the Chinese stock market. At the time of writing the Shanghai Composite index (a stock market index of all stocks that are traded at the Shanghai Stock Exchange) has fallen by nearly 16% over the last week.

If you read the financial press words such as “bear market”, “bull market” and “correction” are being used a lot.

What do these phrases mean and where do they come from?

A bear market is where share prices are falling and is commonly regarded as coming into existence when share indexes have fallen by 20% or more. A market correction is similar to a bear market but not as bad (a market correction is where there is a fall of 10% from a market’s peak).

A bull market on the other hand is where share prices are increasing.

So, where do the phrases bear market and bull market come from?

There are two main views on the origin of these terms.

The first view is based on the methods with which the two animals attack. A bear for example will swipe downwards on its target whilst a bull will thrust upwards with its horns. A bear market therefore is a downwards market with declining prices whilst a bull market is the opposite with rising prices.

The second view on the origin is based around the “short selling” of bearskins several hundred years ago by traders. Traders would sell bearskins before they actually owned them in the hope that the prices would fall by the time they bought them from the hunters and then transferred them to their customers. These traders became known as bears and the term stuck for a downwards market. Due to the once-popular blood sport of bull and bear fights, a bull was considered to be the opposite of a bear so the term bull market was born.

Whatever the actual origin of the terms though I’m sure most people will be hoping for a bull market rather than a bear market.

Momo is certainly a unique lady...

Discrimination in the workplace due to gender, race, religion or sexual preference is not only unethical but is also illegal in most countries. Importantly though[..]
You're fired...
How many CEOs of top global companies were replaced last year? Well, the answer may surprise you and what also may surprise you is the[..]
On your bike...
If you drive to work, one of the nice things is to have a parking place. There’s nothing worse than being on time for work[..]
Dog seized to pay tax bill...
It’s always best to keep up to date with your tax affairs. Although most people don’t enjoy paying their taxes, it’s the law and if[..]
Best to take it back...
Most of you have probably had an interview. In fact, some of you may have had a number of interviews but a boss of one[..]