Financial market terms can be confusing and difficult to understand except for those with specific training in how to decode the language. Part of this is purposeful, to try and keep the understanding of these markets to exclusive circles. Two of the most common terms to hear are ‘bull’ and ‘bear’ markets. While that may sound confusing, in truth they are fairly simple terms to understand.
|Bear Market||Bull Market|
|The market is not doing well||The market is doing well|
|Unemployment is high||Unemployment is low|
|GDP is low||GDP is high|
|Stocks values decrease||Stock values increase|
|Pessimistic outlook||Optimistic outlook|
A bear market is so-called due to the direction that a bear attacks. Bears are tall and attack from their hind legs and so usually attack downwards. Thus a bear market is one on a downward trajectory. This is characterized by the market not performing well, a high unemployment rate, and the value of stocks decreasing. To have a bearish attitude on something is to be pessimistic about its future and cautious when assessing the risk factors.
A bull market is also named after the direction of the animal’s attack, as a bull attacks upwards with its horns. A bull market is a market on an upward trajectory. This is characterized by the market performing well, increased GDP, and a rise in the value of stocks. To have a bullish attitude is to be optimistic about the future and to take on more risks when assessing the value of investments.
Bear Market VS Bull Market
The key difference between bear and bull markets is that they refer to different attitudes when it comes to investing, assessing risk, and the overall performance of a given market. Bear refers to a market that is not performing well or an attitude of caution. Bull refers to a market that is doing and an attitude that is more reckless in its considerations.