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- Why is it called a bull or bear market?

I’m not talking about Pull & Bear here, as similar as it sounds, this is not another clothing brand with weird real-world lore behind its name like Banana Republic.

A “bull market” means a stock market that is rising; a “bear market” is the opposite. Being “bullish” means to expect a stock to rise as opposed to being “bearish”. But how did these animals become synonymous to these meanings in the financial world?

Symbolism:

• The straightforward theory suggests that bears would swipe their claws downwards when they attack whereas bulls would charge and thrust their horns upwards, symbolising the market trend.
• This explanation is too convenient and coincidental, the choice of animal would be arbitrary if we go by their manner of attack. So, let’s look elsewhere.

Literary Evidence:

• There’s a proverb – “don’t sell the bear’s skin before you’ve caught the bear”, kinda like “don’t count your chickens before they hatch”.
• It’s a negative statement to mean that someone shouldn’t depend on something that is uncertain.
• This proverb refers to the middlemen selling bearskins (among other animal skins) at the olden British marketplaces, brokering between hunters and buyers .
• These middlemen would sell bearskins that they didn’t even have on hand yet, speculating on the price the hunter would charge them for and selling at a higher price, profiting from the difference (ie. short-selling).
• These middlemen were called “bearskin jobbers”, over time the name shortened to just be “bear”.
• Then how did bulls become the symbolic opposite of bears?

Animal-Baiting

• Animal-baiting was a barbaric yet popular blood sport in England back in the day.
• People would chain up wild animals in a fighting pit and unleash teams of dogs to maul each other.
• Bets would be placed on whether the beast or the dogs would win.
• Bears and bulls were both popular animals pitted against the dogs.
• Bulls were savage too but unlike bears, they were seen to be more noble, being the symbolic opposition to the bear.

With the prominence of the bearskin trade & its market tactics paired with the gambling environment & popularity of the bull & bear in animal fights back then, it isn’t hard to see how the connotations are coined and carried over till today.

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This series is brought to you by Lee Way (@leewaylau). He will be writing about political & societal issues, history, movies and music on What's Up Wednesday.