Understanding the Bulls and the Bears

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Forex Trading Explained.
DrForex's top selling forex book Bird Watching in Lion Country - Forex Trading Explained in e-format.

Author: Mika Hamilton

Article source: http://www.global-investment-institute.com/. Used with author's permission.

If you've ever flipped on the television to CNN Financial or paged through the finance section of your local newspaper, you may have seen or heard references made to "the bulls and the bears." If you didn't know what was meant by those terms, you're about to find out. I will tell you up front that they were not talking about basketball and football franchises based in Chicago.

"The bulls and the bears" refers to the performance of the stock market. In the most general terms, "ups" are bulls and "downs" are bears. If the stocks and funds in which you have invested have a "bull" day, you're probably one happy camper. You made money. If, on the other hand, it's been a "bear" day, you're probably not going to be feeling too chipper. Remember that no one has much cared for the Bears (save people in Chicago, of course) since 1986 and the days of Walter Payton, William "Refrigerator" Perry, and The Super Bowl Shuffle and you're on the right track.

No one knows for sure where these terms originated, but they are definitely related to the behavior we associate with these animals. Bulls and bears display uniquely opposite attitudes and behaviors. Bulls will charge ahead bravely or angrily at anything that catches their interest while bears are, by nature, more timid and cautious creatures (although I wouldn't recommend approaching one in the wild, regardless) who will move slowly and investigate a situation before taking action. The way that these relate to a "bull or bear" market is evident. When the market is having a strong upswing and is charging ahead by leaps and bounds, it is having a bull run (no, this has nothing to do with the Civil War). When it's on a steady decline, obviously, it's experiencing a bear run (not the Native American who loved Little White Dove, according to the song. That was Running Bear which, I'm told, is far too chilly in the winter - especially in Chicago.)

In all seriousness, however, the bulls and the bears of the stock market have a profound effect on investors, often making or breaking a person's financial future in one day. The wise investor will pay close attention to the market's bull and bear activities and invest accordingly.