Bull vs Bear Market Basics
If you’re new to the stock market, you may not be familiar with the old adage, “bull vs bear market.” What exactly does it mean? Well, there are a couple of theories out there, but one of the most popular takes into account the strategies each of these wild animals takes when fighting against nature. While the bull is known to thrust its horns upward when at odds with a natural enemy, the bear swiftly swipes its paws downward. It’s the nature of the beast, so to speak.
If the nature of the beast is different in the wild, then there is a striking similarity when it comes to the nature of the stock market. In the bull vs bear stock market, the symbol of the bull represents a market that is on the incline. This can be likened to the profits the stock market returned in the boom of the 1990s when the dot com business rocked the world. The NASDAQ peaked in 2000 with levels that rivaled those of the Dow Jones in the mid- and late-1920s. This was thanks, in part, to President Coolidge’s claim that “America’s business is business.” When the Great Depression came in 1929, the stock market took a turn for the worse and embodied everything known to be true about the bear market.
While the auto industry was the catalyst in the crash in the 1920s, the turning tides of the bull vs bear market in the late 1990s and early 2000s can be charged to the rapidly growing number of failing dot-com companies. When the novelty of the dot-com industry wore off, so did the aggressive investors. As a result, the market crashed. Housing prices that had reached unprecedented highs led to an oversaturated market and few buyers who could afford the prices. This trend mimics the downward sweeping motion of the bear in a confrontation with an adversary.
Neither the bull nor the bear is any less ferocious than the other, or less damaging. Each animal has a unique approach when dealing with the forces of nature. As such the highlight of each market scenario is not without consequence. The bull vs bear market trend is an inevitable part of what makes the world go round. Aggressive buying and wealth trends will be forever at odds with their diabolical counterpart: recession or, worse, depression. It’s the nature of the beast, so to speak.
