The Bull & The Bear
The meaning of Bull and Bear in general-
• A bull is someone who believes the stock market will go up
• A bear is someone who believes the stock market will go down.
In stock market, a bull market is a rising market and a bear market is a falling market.
How the names came-
• In many European countries like Germany, Netherlands and Italy there is a saying 'Don't sell the bearskin before the bear is caught.' In all cases, they said the same thing, 'Don't sell something you don't have.' There had to be an alternative animal for bear. The bull seemed a natural contrast, an animal that charges ahead, moves forward, and is strong and powerful (just like a strong stock market).
• Another explanation comes from the way the animals attack their opponents. A bull thrusts its horns up into the air while a bear swipes its paws down. If the trend is up, it's a bull market. If the trend is down, it's a bear market.
The technical definition of a bull market: 20%+ gain in a major asset class over a time period greater than one year. [Major asset class means a type of investment such as stocks or bonds]
The reverse is bear market.
In short a bull market is when everything in the economy is great, people are finding jobs, gross domestic product (GDP) is growing, and stocks are rising.
A bear market is when the economy is bad, recession is looming and stock prices are falling. Bear markets make it tough for investors to pick profitable stocks. One solution to this is to make money when stocks are falling using a technique called short selling. Another strategy is to wait on the sidelines until you feel that the bear market is nearing its end, only starting to buy in anticipation of a bull market.
[Short selling will be explained later]
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