The History Behind Bull And Bear Markets

According to S&P Dow Jones Indices, we've seen an official bear market around every 4 years and 8 months (on average) since 1932. One of the worst bear markets on record was 1929's 86.2%'s loss for the S&P, with stocks not recovering until 1954.

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Why Bulls and Bears?

The terms bear and bull are applied when the performance of an asset(s) or market holds a pattern for either a few months or changes 20% or more from a recent peak or trough. When this behavior is noted, it becomes an official bear or bull market.

When stock prices decline, it triggers a bear market, while an increase triggers a bull market. Bull markets indicate the market is rising and is tied to a sound economy, while a bear market indicates a reclining market or economy.

While the true origins of the terms are disputed, there are two versions that tend to be the most likely linked to their use today, historical and metaphorical.


The historical version is based on the sale of bearskins. Often a middleman involved in the sale would sell the skins before delivery, basing the price on speculation the price would drop. These middlemen were called bearskin jobbers, or bears for short. Because they would undersell the skins, the term bear was used to describe a downturn in the market.

Although bulls were not involved in this process, during this same period in history, bull-and-bear fights were quite popular. Because the bull is in opposition to the bear, the term bull was used for an upward market. This can also be tied to the metaphorical explanation, with the upward bullish attack of the horns and the downward bearish motion of the paw.


This explanation ties the terms to a metaphor for the upward and downward action of the market. When a bear attacks, it swipes its paw downwards and when a bull attacks, it thrusts its horns upwards. Hence, a bear market is a downward trend, while a bull market is an upward trend.  

Which Term Came First: Bull or Bear?

Aligned with the historical version above, it is likely that the use of the term bear came first. Not surprisingly, there was an old saying, “It is not wise to sell the bear’s skin before one has caught the bear.” According to Merriam-Webster, this term was used before the eighteenth century, when we see the use of the term bearskin jobber shortened to bear.

The earliest record of the term bear used to describe the market was in 1709. Richard Steele, the publisher of the British journal The Tatler, coined the phrase “selling a bear” in an essay to describe someone placing value on an imaginary object.

The Appearance of the Bull

While this positive market term is associated with blood sports dating back to the 1200s, the use of the term was likely adapted in relation to the gambling element of the “game.” With vast sums of money placed on the event’s outcome, it makes more sense the term was related to the money exchanging hands as opposed to the gruesome goring of the bear by the bull’s upward-thrusting horns.

A bull position means investors expect their asset(s) price to increase, while a bear position has the opposite expectation. Also known as short positions, they are often used when describing expectations when short-selling a security.

Patterns In The Market

A secular bull or bear market describes long-term patterns in the market. When inflation or deflation influences purchasing changes, this is more typical of a secular bull or bear market. A secular bull market refers to wealth creation that is performing noticeably better than regular market volatility. On the other hand, a secular bear market indicates economic stagnation and weak investor sentiment.

In a secular bull market, there might be short-term decreases, but they are outweighed by long-term growth. However, in a secular bear market, economic selling pressure causes weak investor sentiment, which continues for an extended period.

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