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Bulls and Bears on the Stock Exchange

Article by Never Rich Enough | 26/04/2012 at 10:04

In front of the Frankfurt Stock Exchange there are two large figures: those of a bull and those of a bear. But what have bulls and bears to do with the stock market and what is being discussed when we speak about a bull or a bear market?

Bull and Bull-Market

The bull stands for continued rising prices on the stock exchange. In this context we are also speaking about Hausse (French for growth). Accordingly, a bull market is characterized by increasing prices and speculating on an increase of the market price of papers. Papers are bought in the expectation of selling them at a higher price later. This is known as bulls, because the bull hits with its horns upwards.

Bear and Bear-Market

In contrast, the bear stands for continued falling prices on the stock exchange. Here we are also speaking about Baisse (French for decrement). A bear market is characterized by falling prices and speculating on the falling market price of papers. Therefore, people are buying put options in this market, because the want to profit from the falling values. In this context, we are speaking of bears, since the bear strikes with its paws down.

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