Bull Market.  Bear Market.  Most people have heard the terms, but what do they mean?  Bull Market is what most everyone hopes for--rising stock prices.  Bear Market, just the opposite.  But where did these odd phrases originate from?

 

There is no certainty on the origin of either phrase.  But the history of Bear Market is more colorful and seems to have more agreement among historians.

Way back when, in perhaps the 16 ^th century, bearskins were a traded commodity.  Trappers would kill the bears--sorry animal lovers--and sell or trade the bearskins to traders for money or goods.  These traders would sell to their customers.  The traders would agree on a price with their customers before paying the trappers for the bearskins.  Since the traders were setting the price with their customers before paying for the bearskins, they would have to guess what the bearskin would cost them.  Naturally, they'd hope that the market price of bearskins would decline so they would pay the trappers less, increasing their profit.  That's how a market decline came to be called a "Bear Market."

 

Bull Market has a murkier explanation.  Some people attribute Bull Market to the energy displayed by a bull, as opposed to the stereotype of a sleepy bear.  Another explanation is the fighting style of each animal.  Bears attack by thrusting their paws in a downward motion.  I haven't been attacked by a bear, so I'm guessing this is true.  A bull, in contrast, fights by thrusting its horns in an upward motion, signifying the stock market's upward direction. 

 

Bottom line, who really knows?  Regardless of the labels, pay attention to what's happening in the stock market.  Nothing goes in one direction forever.  We've had eight years of mostly upward stock market movement.  How long will it last?  That's the question we hear often.  And our answer?  We don't know.  Honest and yet not very helpful.  No one knows.  People who tell you they know, are either liars or fools.  Either way, don't listen to them.

 

It's not a difficult next step to conclude that we probably won't have another eight years of rising stock prices.  What to do?  Make sure you have a diversified portfolio, with enough cash to see you through the next bear market--average length about nine months.  The bear is currently in hibernation, but will eventually emerge, and he probably won't be in a good mood.