Bull and bear
The content of this article
Two popular terms that you have probably heard of in stock contexts are the words bull and bear. It is common to use these two terms to describe ups (bull) and downs (bear), here we explain how it is connected.
What does Bull & Bear mean?
Simply put, bull and bear mean the following:
- Bull market – rise on the stock market, the market is going up.
- Bear market – decline on the stock market, the market is going down.
It can be a little difficult to determine why it is called bull and bear as these animals do not have much to do with either the stock market or any clear connection to upward or downward movements.
One way to remember this may be to imagine that the bull barks upwards and the bear claws downwards. See the picture below.
History of ups and downs
There are a lot of statistics that indicate that ups and downs follow certain patterns in the market. Sometimes people talk about economic cycles with ups and downs (recession), but often bull & bear is also used for this. It turns out that the bull market has lasted for an average of 9 years in the twentieth and twentyfirst centuries and that the bear market has lasted for an average of 1.4 years. These are statistics from US markets.
How to take advantage of bull market or bear market?
You can take advantage of both ups and downs on the stock market in many different ways. In its simplest form, successful stock trading is buying when it is cheap and selling when it is expensive in the market. If you know and keep a close eye on the ups and downs, you are more likely to buy cheap and sell expensive on several occasions. You do not have to pick the cheapest or the most expensive to succeed, but in the long run, success depends on you consistently doing good business.
There is also a technology called ”shorting stocks” where you profit from selling your stockholding expensively with the promise of being able to buy it back at any time. If the stocks go down, you can buy it back cheaper and get money left over from the sale.