Bull and Bear Markets - Which Is Which?
Unless you're knowledgeable about the financial industry, it's possible that this question, "Is it a bull or a bear?" may well draw a blank stare.
If you're like me, you're thinking, "OK, what exactly do each of these words mean when you're talking about the stock market? Is a good market, a bull or a bear, and why can't I ever remember?!?" Of course, if English isn't your first language and you're an ESL learner, the question is even more confusing.
Does being "bullish" or "bearish," mean that you're going to charge through the stock exchange swiping at traders, or maybe marauding through your local bank branch, brandishing horns? Terminology associated with the financial industry can be especially confusing, even for native English speakers, like me.
And yet in these volatile economic times (once again the markets are fluctuating, due to the strife in the Middle East and the devastation in Japan) being financially literate is more important than ever.
The fact is, many of us have financial literacy skills that are, shall we say, not so great.
A recent study found that, in Canada where I live, 55 per cent of adults had low levels of numeracy (the ability to use math skills in daily life, such as balancing a bank account).
And 49 per cent had low levels of document literacy.
Document literacy is the ability to understand information in forms and charts -- including things like maps and bus schedules.
Numeracy and document literacy are two basic, fundamental elements of financial literacy.
So it's more than a little scary that our communication abilities in this area are as weak as these statistics suggest.
Meanwhile, there's hope.
Our Task Force on Financial Literacy is recommending urgent action on a national strategy to strengthen Canadians' financial literacy.
If some of their recommendations are actualized, through partnerships with all levels of government, financial institutions and other organizations, improved education etc.
, one day those statistics may improve.
To help improve your financial literacy and sort out some of the language elements of "finance-speak," I'd like to clear up the Bull vs.
Bear confusion.
So here's my Financial Terminology De-Coder: Bull vs.
Bear: A Bull Market implies investor confidence and increased investing, because people believe the economy is showing signs of recovery.
A Bear Market, on the other hand, indicates a decline in the stock market over a period of time.
Origins: They are disputed, but here are three common theories: Theory 1: Bulls attack by thrusting upwards with their horns, thus symbolizing the market going up.
Bears attack by swiping down with their paws, thus symbolic of the market trending down.
Theory 2: Historically, bearskins were bought from trappers by middlemen who would then sell them to other people.
Sometimes they'd take orders for skins they hadn't yet received, speculating that the next lot they'd get from the trapper would be cheaper.
That way they'd profit from the amount they'd charge the consumer.
In other words, these traders hoped for a downturn in the market, so they could profit.
Theory 3: There was, once upon a not very pleasant time, a popular blood sport known as bull-and-bear fights, so the two are natural opposites, thus a logical symbol of victory and defeat.
Now that I've set you straight on the difference between bull and bear, maybe in my next article, I'll write about getting into the red, or the black.
But, wait a minute, which is it that you want to be in again?
If you're like me, you're thinking, "OK, what exactly do each of these words mean when you're talking about the stock market? Is a good market, a bull or a bear, and why can't I ever remember?!?" Of course, if English isn't your first language and you're an ESL learner, the question is even more confusing.
Does being "bullish" or "bearish," mean that you're going to charge through the stock exchange swiping at traders, or maybe marauding through your local bank branch, brandishing horns? Terminology associated with the financial industry can be especially confusing, even for native English speakers, like me.
And yet in these volatile economic times (once again the markets are fluctuating, due to the strife in the Middle East and the devastation in Japan) being financially literate is more important than ever.
The fact is, many of us have financial literacy skills that are, shall we say, not so great.
A recent study found that, in Canada where I live, 55 per cent of adults had low levels of numeracy (the ability to use math skills in daily life, such as balancing a bank account).
And 49 per cent had low levels of document literacy.
Document literacy is the ability to understand information in forms and charts -- including things like maps and bus schedules.
Numeracy and document literacy are two basic, fundamental elements of financial literacy.
So it's more than a little scary that our communication abilities in this area are as weak as these statistics suggest.
Meanwhile, there's hope.
Our Task Force on Financial Literacy is recommending urgent action on a national strategy to strengthen Canadians' financial literacy.
If some of their recommendations are actualized, through partnerships with all levels of government, financial institutions and other organizations, improved education etc.
, one day those statistics may improve.
To help improve your financial literacy and sort out some of the language elements of "finance-speak," I'd like to clear up the Bull vs.
Bear confusion.
So here's my Financial Terminology De-Coder: Bull vs.
Bear: A Bull Market implies investor confidence and increased investing, because people believe the economy is showing signs of recovery.
A Bear Market, on the other hand, indicates a decline in the stock market over a period of time.
Origins: They are disputed, but here are three common theories: Theory 1: Bulls attack by thrusting upwards with their horns, thus symbolizing the market going up.
Bears attack by swiping down with their paws, thus symbolic of the market trending down.
Theory 2: Historically, bearskins were bought from trappers by middlemen who would then sell them to other people.
Sometimes they'd take orders for skins they hadn't yet received, speculating that the next lot they'd get from the trapper would be cheaper.
That way they'd profit from the amount they'd charge the consumer.
In other words, these traders hoped for a downturn in the market, so they could profit.
Theory 3: There was, once upon a not very pleasant time, a popular blood sport known as bull-and-bear fights, so the two are natural opposites, thus a logical symbol of victory and defeat.
Now that I've set you straight on the difference between bull and bear, maybe in my next article, I'll write about getting into the red, or the black.
But, wait a minute, which is it that you want to be in again?
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