When the stock market rises consistently over a period of time, often months or years, and grows by 20% or more, it is called a bull market, and when it falls by 20% or more*,There is no specific and universal metric to identify bull or bear markets, but the most common definition is when the change is 20% or more. it is called a bear market.
In the stock market, there is a concept called short-selling, which allows you to sell stocks that you don’t own (you just borrow them) and make a profit.
E.g., you could borrow 1000 shares from company X, where each share is priced at $10.
Now, you sell these shares for $10,000 in the market, and after a few days, when the share price falls to $8, you buy from the market for $8,000 and handover the shares to the lender and pay an extra $500 as ‘lending fee’ (making a profit of $1500 i.e., $10,000 – $8,500).
Company X can’t question you because you had borrowed a number of shares and not a specific amount.
Also, the share values go up & down, so this doesn’t bother the lending company, all it is interested in is the lending fee.
In the 18th century, people who practiced this form of share-selling were called ‘bear-skin jobbers’*They were looked down upon because the practice involved speculation and betting on the future and making a profit from something, one didn’t own. and they were said to be selling the ‘bear-skin’.
Soon, ‘bear-skin jobbers’ was shortened to just ‘bear’, and these bears sold stocks with the expectation and desire that the ‘prices should fall,’ and because such a situation was to their liking, it was a ‘bear market’.
The term, which is believed to have been first used in print in 1709, became popular when many people sold borrowed shares in South Sea Company in 1720*.Leading to one of the biggest crashes in the history of stock markets.
The evidence on how ‘bull’ came about is limited; however, the leading theory is that it came about as a result of the term ‘bear’.
During that time, bear-bait was a common sport – people chained a bear in an area and unleashed dogs to attack it for entertainment.
The bear protected itself as much as it could and killed its competitors by swiping its paws down.
While bears were one of the most popular animals for such games, bulls were also commonly used.
And bulls attacked their competitors (dogs) by thrusting their horns and tossing the dogs up, which was the opposite of how bears killed their enemies.
So, if bears represented downfall, bulls became associated with upward movement.
