Mysterious origin of terms “Bull” and “Bear” market

You must have read and heard about the terms “Bull” and “Bear” markets and someone being referenced as “bullish” or “bearish”. The ‘Raging bull’ of Wall Street is well known in the popular media but you wouldn’t have known the story behind such terms.

For those who don’t know what a “bear”  and a “bull” market is, or when is something “bearish” or “bullish”, relax, these may be financial jargons, but easy to understand.

A Bear market is the one where the investors are conservative and pessimistic about the market, resulting in fall in stock prices marked by mass selling of stock. Thus, such investors or stocks are called “bearish”.

On the other hand, a bull market is the one where the investors are positive and confident about the market, this optimism results in an increase in stock prices riding on the hopes of investors who indulge in hefty buying. This is simply the opposite of a “bearish” market.

These terms “Bull” and the “Bear” market first came up in the 18th century in England.

There are many theories behind the “bears” laying their everlasting mark on the financial world, but the leading theory is that it is derived from an old 16th-century proverb:

“selling the bear’s skin before one has caught the bear”

or alternatively,

“Don’t sell the bear’s skin before you’ve killed him”

These proverbs may not be used in the modern language but they did inspire their famous counterpart.

“Don’t count your eggs before they’re hatched.”

In the early 18th century, when people would sell something they didn’t own just yet (in the hopes of buying that commodity at a cheaper rate than sold before the delivery was due, thereby booking profits), this practice gave rise to the expression that they “sold the bearskin” and the people themselves were called “bearskin jobbers”.

The earliest reference to such expression can be found from an issue of The Tatler, 26 April 1709, which read as follows:

I fear the word Bear is hardly to be understood among the polite people; but I take the meaning to be, that one who insures a real value upon an imaginary thing, is said to sell a Bear, and is the same thing as a promise among courtiers, or a vow between lovers…

Another instance of this term can bee found in Daniel Defoe’s The Anatomy of Exchange Alley (1719). With this edition, it was a decade later after the Tatler that the term was popularized with the definition as we use today:

Those who buy Exchange Alley Bargains are styled buyers of Bear-skins.

The use of the word “bear” was soon popularized by one of the earliest known market bubbles called the South Sea Bubble in 1711. The story of South Sea bubble is a long one to tell, but it can be regarded as one of the largest scams in the history, with company’s worth reaching $537 billion at its peak (which makes it only second to Apple in most valued business).

As for the term “bull” for the rising markets, the theories arise more out of speculation than any documented evidence. The leading theory is the one that came about as a direct result of the term “bear”. To be more specific, the first known instance of the term “bull” (in financial markets) came up in 1714, 5 years after the term “bear” popped up.

In the early 18th century, it was a common practice of organizing bull and bear baits. With bear baiting being more popular, they’d chain a bear (or bears) in a pit, and then release some other animals (usually dogs) to attack the helpless bear(s) as a form of entertainment for the spectators.

Bear Bait
Bear Bait

Even though bears were more popular in such events, bulls followed suit soon. It was rare to use other animals in such cruel games. At one instance, an ape was tied to a pony’s back and dogs were set out to attack them. According to the spectators, it was very laughable, but we feel that’s just cruel.

Bull bait
Bull bait
Image Credits: Wikipedia

Coming back to the topic, the popularity of bear and bull baiting along with the association of the charging bulls could be perhaps the reason why “bull” was chosen as a direct counterpart for the “bear”, in the financial world of course. But, we can’t be sure on such theories as there weren’t any documents available which prove the fact, as there were in the case of the term “bear”.

Saksham Dewan

Saksham Dewan is a blogger from India, a quizzer, a chess player, and a finance enthusiast. He is a student at Shaheed Sukhdev College of Business Studies majoring in Finance. He loves to write on topics he startled by, be it be anything. To fulfill his quizzing dreams he also runs a Business Quizzing Blog, not only to pursue his interests but also help others preparing for such quizzes.