It has been suggested that the expressions relate to bull and bear fighting, previously a bloodsport in parts of Europe. Bulls would gore with their horns in an upward motion, whereas bears tended to swipe in a downward motion. The metaphor is obvious, but is unlikely to have been the true origin.
More likely is that the term “bear” derives from an old French proverb applied to the English market – “ 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”). This proverb was applied to speculators in the South Sea Bubble scheme around 1720, alluding to the risky practice of bear trappers who would sell on the skins before having caught them. Incidentally, the similar bearish term of share prices “going south” also finds its roots in the disaster of the South Sea Bubble.
As for the bull, it became the natural term to be paired with the bear to denote the opposite trend or activity, i.e. buying stock in the hope of a price rise.
One of the first examples of these terms appearing in print was in Thomas Mortimer’s 1785 book, “Every Man His Own Broker”. At that time the Market was situated in Exchange Alley, or simply "the Alley”. He said that “a man who in March buys in the Alley 40,000 pounds [of stocks for settlement] for May, and at the same time is not worth ten pounds in the world ... [he] is a Bull, till such time as he can discharge himself of his heavy burden by selling it to another person, and so adjusting his account, which, if the whole house be Bulls, he will be obliged to do at a considerable loss.”
And the bear? This was “a person who has agreed to sell any quantity of the public funds more than he is possessed of, and often without being possessed of any at all, which, nevertheless, he is obliged to deliver against a certain time: before this time arrives, he is continually going up and down seeking ... whose property he can devour; you will find him in a continual hurry; always with alarm, surprise, and eagerness painted on his countenance; greedily swallowing the least report of bad news; rejoicing in mischief, or any misfortune that may bring about the wished for change of falling stocks, that he may buy in low, and so settle his accounts to advantage.”
Maybe a case of “Plus ça change, plus c’est la même chose” – the more that things change, the more they stay the same!
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Richard J Hunter
Head of UK Equities
Hargreaves Lansdown
www.hargreaveslansdown.co.uk