Stock market jargon simply explained

When we talk about developments on the stock market, the terms bull or bear are often used. Words derived from these terms such as bull or bear market, bull or bear trap or bullish or bearish are also an integral part of stock market jargon. But the bull and the bear are not only linguistically part of the stock exchange like the day and the night are part of the daily routine; the often quoted animal couple also presents themselves visually in the form of life-size bronze figures in front of the largest German stock exchange, the historic stock exchange building in Frankfurt am Main. Read more here about what is a bull trap for further information.

What do the aforementioned stock market terms mean, and how did the bull and the bear find their way into the financial language?

The meaning of the terms

Information from the NetzAnders as the history of the entry of animals into the language jargon of the stock market is the meaning of the terms clearly explain: The bull symbolizes rising prices, the bear falling prices, a bull market therefore longer-term rising prices, a bear market over a longer period falling prices. But that’s not all, the terms also describe the mood on the stock market, i.e. future expectations. Moreover, during a bull market, negative news often puts less pressure on stock prices than during a bear market – and vice versa.

The terms used only in Germany, Italy and the English-speaking world can be translated with the terms bear market (for bear market) and bull market (for bull market). Those who fall into the bull trap are those who rely on false forecasts of rising prices, those who fall into the bear trap are those who rely on false forecasts of falling prices.

Various factors can be mentioned as triggers for a bull or bear market or a bull market or bear market. Often these are changed economic data; also interest rate decisions of the central banks, speculations or positive or negative surprises can trigger a bull or bear market, turn into the opposite or inspire.

History

Different legends can be found to explain the entry of zoological terms into stock market jargon. One of these legends goes back to the Crimean War in the 19th century. At that time a Sir John Bull led the victorious English troops against the Russians, who carried their national animal, the bear, in their coat of arms. “Run with the Bull” meant to be on the winning side. So the term bull can be derived for optimists and for rising, the term bear for pessimists and falling prices.

Another legend goes back to the 17th century. Risk forwards were already known at that time. Speculators sold shares not yet in their possession at a future date in the hope of being able to cover them cheaper at a future date and pocket the difference as a profit. Such transactions, translated figuratively, bought the fur of the bear in anticipation of falling prices before the bear was shot. Also in this context the bear could have become a synonym for falling prices.

A third explanation goes even further back into the past. According to this, a British literary figure was a guest at the Amsterdam Stock Exchange in the 16th century. Legend has it that the behaviour of the brokers reminded him of a special bullfighting variant in South America in which bulls fought bears. By the way, similar show fights are said to have taken place in the 17th century near the London Stock Exchange as popular amusement.

Conclusion with a small donkey bridge

Which of these stories has actually connected rising prices with the bull, falling prices with the bear, can no longer be ascertained. But a donkey’s bridge helps to assign the terms correctly and is also suitable as a fourth explanation: the bull throws his horns upwards in battle, while the bear strikes his paws downwards. Thus the bull has become a symbol for rising prices and the bear the bankrupt vulture of the stock exchange. Or, in reference to the French word Baisse for falling prices: the bear is bearish.

The serenity with which many investors seem to accept the trend change is dangerous. Do the bulls wriggle in the trap without noticing? The trading turnover shows: Very few of them have already sold their newly bought shares again. But at the moment almost only owners of biotech shares are allowed to feel comfortable. They often lead a life of their own far away from economic worries. Morphosys is just one of many examples. This Tec-Dax share is now worth more than 100 euros for the first time since 2000.

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