BULLS AND BEARS
[Q] From Thomas B Jones, South Africa: “In Stock Exchange parlance, bull and bear relate to being “long” or “short” of a particular security. I have heard that the term has its origins in two old English family stockbroking or banking businesses — the Bulteels and the Barings — the latter bank failing only relatively recently. The Bulteels tended toward a more aggressively positive or bullish view on stocks and shares while the Barings tended to be more cautious. I should be grateful for your comments.”
[A] Your explanation of the two terms no doubt makes perfect sense to somebody in the business, but it lacks a bit for the rest of us. To keep it simple (that last phrase being a ritual incantation to prevent my being nibbled to death by experts), a bear sells shares, sometimes shares he doesn’t own, hoping to buy them back later at a lower price (in the jargon, he is “short” of the necessary shares), so is hoping for a fall in the market price and may be considered a pessimist; a bull buys shares hoping to sell them at a higher price later, so is essentially an optimist about the way the market is moving (by analogy, he is said to be “long” because he has some shares on hand).
The story about the two famous banking families is widespread, and believed by a lot of people, but there’s no truth in it. Though Barings was until recently a well-known bank (whose spectacular demise rendered it more famous than ever it was during its life), there was no equivalent Bulteel family firm that I can trace. Another, rather more weird, story was told on a BBC programme in January 2008 — that bears attack by striking down with their paws, while bulls attack by striking up with their horns.
Bear is surprisingly old; it is first recorded at the very start of the eighteenth century, and was common at the time of the infamous South Sea Bubble of 1721. The earliest examples have it as bear-skin jobber, a jobber at that time being a middleman or wholesaler who bought and sold shares on the floor of the London Stock Exchange. This phrasing gives us the clue. There was at the time a proverb, probably borrowed from French ne vendez pas la peau de l’ours avant de l’avoir tué, “don’t sell the bear’s skin before you’ve killed the bear” (the English equivalent refers to catching rather than killing the bear). It had the same sense as “don’t count your chickens before they’re hatched”, that is, don’t assume your success is assured until it actually happens, don’t be over-optimistic. A bear-skin jobber sold shares he didn’t own, in the hope that their price would fall and that he would be able to “catch his bear” by buying them more cheaply in the market before he had to deliver them.
Bull came along pretty quickly afterwards (it’s recorded from 1714) and the suggestion is that it was invented as an alliterative animal analogy to bear, perhaps even with a subconscious image of charging forward fearlessly.
Last updated 2 Feb 2008
