1.The bull and the bear are iconic animal representatives of the stock market. The terms «bullish» and «bearish» have become so pervasive in the language used to describe traders, markets and even commentators, that it’s hard to imagine a financial conversation where they’re not used. There’s even a famous statue of a bull that’s one of the sights of Wall Street.
2.For those who don’t know, a “bear” market, or when someone is being “bearish” in this context, is marked by investors being very conservative and pessimistic, resulting in a declining market generally marked by the mass selling off of stock. A “bull” market is simply the opposite of that, with investors being aggressive and positive, with stock prices rising as a result of this optimism. This “bull” and “bear” terminology first popped up in the 18th century in England.
3.There are a couple different possible sources for the “bear” part of this tandem, but the leading theory is that it 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,” equivalent to, “Don’t count your eggs before they’re hatched.” By the early 18th century, when people in the stock world would sell something they didn’t yet own (in hopes of turning a profit by eventually being able to buy the thing at a cheaper rate than they sold it, before delivery was due), this gave rise to the saying that they “sold the bearskin” and the people themselves were called “bearskin jobbers”.
4-5. The leading theory is that it came about as a direct result of the term “bear”. Specifically, the first known instance of the market term “bull” popped up in 1714, shortly after the “bear” term popped up. At the time, it was something of a common practice to bear and bull-bait. Essentially, with bear baiting, they’d chain a bear (or bears) up in an arena, and then set some other animals to attack the bear(s) (usually dogs) as a form of entertainment for spectators seated in the arena.
While bears were one of the more popular animals to use in these games, bulls were also commonly used. More rarely, other animals were used such as in one instance where an ape was tied to a pony’s back and dogs were set on them. According to one spectator, the spectacle of the dogs tearing the pony to shreds while the ape screamed and desperately tried to stay on the pony’s back, out of reach of the snapping jaws of the dogs, was “very laughable”…
In any event, the popularity of bear and bull baiting, along with perhaps the association with bulls charging, is thought to have probably been why “bull” was chosen as something of the antithesis of a “bear”, shortly after “bear” first popped up in the stock sense. But, of course, we can’t be at all sure on this one as there wasn’t the more lengthy documented progression of definition as with the “bear” term.
6. A colloquial term that refers to the tendency of certain investors to ignore bad news that can affect their investments. In the investment context, «ostrich» is based on the popular misconception that when this large bird senses danger and cannot run away, it buries its head in the sand.
An ostrich does not actually bury its head in the sand when confronted by danger, but flops to the ground and remains motionless. This passive behavior exacerbates the danger faced by the ostrich, since it becomes an easy target for a predator who is not fooled by this feeble attempt to play dead.7. An investor who lacks a focused trading strategy and trades on emotion and the suggestions of others, including friends, family and financial gurus. This type of investor often makes rash investments without first determining whether these decisions are financially viable. The behavior of sheep contrasts with that of bulls and bears, who have focused views about the market.
Like a sheep, this type of investor is a follower, relying on a shepherd for guidance. These shepherds can come in the form of financial pundits or the latest trend or market story. Many experts believe that sheep-like investors are the most likely to sustain investment losses because they have no clear investment strategy.
8. In the act of an investor following the crowd into an investment, without doing research themselves; this usually results in losses. These investors are emotional and easily swayed by the current ongoings of how well or bad the market is doing. This term is considered a «herd» mentality that can increase the chance of losing invested funds, because investors either leave the market too early or get into it too late, when prices are already too high to make a profit.
In the animal kingdom, a lemming is a rodent known for periodic mass migrations that occasionally end in drowning.
9. An investor who is often seen as greedy, having forgotten his or her original investment strategy to focus on securing unrealistic future gains. After experiencing a gain, these investors often have very high expectations about the future prospects of the investment and, therefore, do not sell their position to realize the gain.
Like a pig in the farmyard that overindulges in feed, this type of investor will hold onto an investment even after a substantial movement in the hope that the investment will provide even greater gains
10. An investor who is petrified of incurring losses from investing. A chicken will generally shun most investments, even low-risk ones, since almost any investment carries an element of risk. Treasury bills and bank deposits are favored investments for chicken investors, although they may even fret about the credit rating of the United States government or the likelihood of bank failures
The biggest risk a chicken faces is the loss of purchasing power due to inflation over prolonged periods of time. This may leave them especially vulnerable during retirement, since the steady increase in life expectancies means retirees need a greater pool of savings to sustain themselves for longer periods of time.
A chicken investor may thus rue the decision to completely avoid risk in his or her younger days, since the ability to take on investing risk is inversely proportional to age. A chicken investor should therefore attempt to take on risk in measured amounts in his or her investment portfolio, and should use risk mitigation techniques to minimize risk.Tried-and-tested investment techniques like diversification can bring down portfolio risk to an acceptable level for almost any investor.
11. What Type of Investor Will You Be? There are plenty of different investment styles and strategies out there. Even though the bulls and bears are constantly at odds, they can both make money with the changing cycles in the market. Even the chickens see some returns, though not a lot. The one loser in this picture is the pig. Make sure you don’t get into the market before you are ready. Be conservative and never invest in anything you do not understand. Before you jump in without the right knowledge, think about this old stock market saying: «Bulls make money, bears make money, but pigs just get slaughtered!»