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Bears, bulls, and BS

Brown bear at Brooks Falls Katmai National Park, 1998. 

A famous bear. Winnie the bear cub and Canadian veterinarian Harry Colbourne, who donated Winnie to the London Zoo in 1915. The bear inspired A.A. Milne's character Winnie the Pooh.

Bear Market:  “A market in which securities or commodities are persistently declining in value,” according to Merriam-Webster.

Bearish:  “Expecting the price of stocks to go down: characterized by falling stock prices.”

Bull Market: “A market in which securities or commodities are persistently rising in value.”

Bullish: "expecting the price of stocks to go up: characterized by rising stock prices."

How did we get these terms?

Well, if you compare the sounds of the Bear and the Bull, you will find absolutely no clues to why we associate these animals with different stock market phenomena.   They are pretty cool sounds though. 

The origins are "a little obscure," says economic historian John Steele Gordon.  “These terms are very old, they go back virtually to the dawn of stock speculation in the early 18th century."

Check out this section of a poem by Alexander Pope, dated by Bartleby to some time before 1727. It refers to investing in the South Sea Company (which, incidentally, turned out to be a giant bubble).

Come, fill the South Sea goblet full;

The gods shall of our stock take care;

Europa pleased accepts the Bull,

And Jove with joy puts off the Bear.

Before we get to the best answer we have, here are some theories you might’ve heard.

Gory Disembowelment Theory

In this, the most commonly heard theory, the terms come from the two animals’ methods of attack.  A market where prices are going up is called a bull market because a bull will lower his horns and toss his enemy up

A market where prices are going down is called a Bear market because the bear (allegedly) swipes down to kill his prey. 

The Bulletin Board Theory

Canadian Tech Blogger Nick Waddel dug up this apocryphal explanation.  The story goes that in the early days of the London Stock Exchange, people used to post offers to buy stocks on bulletin boards.  “When the offers were abundant, the board was full of bulletins – later shortened to bull.  When the offers were scarce, the exchange was bare of offers and that term evolved into bear,” says Waddell -- who isn't convinced of this one himself but he likes it anyway. 

The Theory That Has Any Actual Evidence

All of the above theories are wrong.  Or, at least, totally unproven, according to Wall Street Journal language columnist Ben Zimmer, who is also a producer for Vocabulary.com.

“People like coming up with theories,” he says, “especially when it’s something like bull or bears and it’s not immediately obvious why we should be using these terms.”    

Bravado and Bear Skins

He says the term Bear Market (stocks going down) most likely comes from an old saying:

“Don’t Sell the Bear Skin Before You’ve Caught the Bear” – a little bit like today’s “don’t count your chickens before they hatch.”  

Because back in the early 1700’s, that’s kindof what some traders started doing. 

“There were a lot of speculators engaging in what we’d now call shortselling,” says Zimmer. “They were selling stocks they don’t yet own, with the expectation that by the time it was due for delivery, that the price would fall before then, and the speculator would make a profit.” 

(It’s a little complicated - but it’s like if Facebook stock were $100 today, and I were pretty sure that tomorrow the market would tank and it would fall to $50.  Even though I don’t actually own any Facebook stock, I’d say to you “hey! I’ll sell you some Facebook stock today!  But I can’t deliver it till tomorrow. Kthxbai.”  You’d pay me your $100 bucks, and then tomorrow, on my way to your place to deliver the Facebook stock which I still didn’t own, I’d stop by the market and actually buy it for dirt cheap after the market sank.  I’d make a ton of money that way.... if, of course, I was right that the market was going down.  If I was wrong then I’d be up a creek.)

“That was called selling the bear skin, based on the old proverb,” says Zimmer.  A person who practiced this was called a “Bear Skin Jobber,” which was shortened to “Bear”.  Eventually, markets that were conducive to this practice – where prices were falling – were called Bear markets.

 “So we have a pretty good idea of the bear part of bull and bear, but the bull is more mysterious,” says Zimmer.

Bulls and BS

There isn’t much in the way of historical evidence to support any one theory about the origin of the Bull side of the equation. 

It could be that at the time that “bear” came into common financial parlance, “bull” was simply a logical counterpart in people’s minds because both animals were used in sporting events where they would square off against one another or against dogs. 

Or it could be simply that surging markets “charge ahead” just like bulls do.  But the bottom line is we don’t know for sure.

My vote goes to gory disembowelment theory.   

About the author

Sabri Ben-Achour is a reporter for Marketplace, based in the New York City bureau. He covers Wall Street, finance, and anything New York and money related.

A famous bear. Winnie the bear cub and Canadian veterinarian Harry Colbourne, who donated Winnie to the London Zoo in 1915. The bear inspired A.A. Milne's character Winnie the Pooh.

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