Why the animals?

June 19, 2024

Bear and bull markets explained

Youve probably heard the term bear market a lot lately but what does it mean?

How does it differ from a so-called bull market?

And why are we involving animals in all this?

What does it mean?

Bear market: Prices are dropping. Youre losing money. You stop shopping at Woolies. Your wife is angry. Nothing makes sense anymore.

Bull market: Prices are rising. Youre an analyst, a genius, a stock market guru. Warren Buffet is a child in your eyes.   

When is it official?

Usually, an increase or decrease of 20% or more from a recent high or low. So, right now, were in a bear market. The best metric to use for stocks is the S&P 500, which is down ~22% from its high in January. 

The crypto markets have also tanked, crashing from a combined market cap of $3T in Nov 2021 all the way down to $840B. 

Why the animals?

A majestic bull and a powerful bear certainly present striking images, but how did these two come to be associated with financial markets? 

There are multiple theories for the terms origins. The most popular story today relates to how the animals kill their prey: bulls gore enemies by bucking their horns UP toward the sky, while bears attack by swiping their claws DOWN toward the ground. These actions were then related metaphorically to the movement of a market.

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