“Bear market” / “Bull market” : what relationship those animals have with economy?

Question

I know that a bull market is a upward trend and a bear market a downward trend, but how those animals ended in the financial terminology?

Answer 1

From Wikipedia:

The precise origin of the phrases "bull market" and "bear market" are obscure. The Oxford English Dictionary cites an 1891 use of the term "bull market". In French "bulle spéculative" refers to a speculative market bubble. The Online Etymology Dictionary relates the word "bull" to "inflate, swell", and dates its stock market connotation to 1714.[14] The fighting styles of both animals may have a major impact on the names. When a bull fights it swipes its horns up; when a bear fights it swipes down on its opponents with its paws.[15] When the market is going up, it is similar to a bull swiping up with its horns. When the market is going down it is similar to a bear swinging its paws down.

See the Wikipedia article for even more theories.

Answer 2

One argument that has been put forward for Bull vs Bear is that bearskin traders would sell bearskins they did not own, and hope to make a profit by later purchasing skins from trappers at a lower price. This would be an early form of short selling where the delivery of the skins to the ultimate end use would occur later. Because a bearskin trader made money in a falling market, a falling market became known as a "bear market".

If this explanation is correct then the term "bull" market comes from the idea that people bull and bear were mortal enemies and if a bear market meant a falling market, then a bull market must mean the opposite.

Answer 3

Some suggestions as to possible etymologies are made here citing various characteristics of bulls and bears; I don't believe a word of it myself, and I'd think a far better answer is to be found here; for what it's worth, I'd bet on the estimable Mr Quinion.

To summarise (for bear):-

A noble gentleman of this city, who has the honour of serving his country as major in the Train-bands, being at that general mart of stock jobbers called Jonathon’s, endeavouring to raise himself (as all men of honour ought) to the degree of colonel at least; it happened that he bought the Bear of another officer.

The Tatler, 7 July 1709. This tongue-in-cheek tale is saying that the major, wanting to buy a promotion, speculated by selling some stock short. When the transaction went wrong, the story goes on, the major described his fellow officer as a bear-skin man, among other epithets, and called him out, satisfaction being achieved through a fist-fight, neither man being keen on firearms.

Answer 4

Perhaps because a bull is considered an aggressive animal, one that charges against its enemies, it has been connected to initiative and activity that marks an upward trend. On the other hand, bears spend a long time hybernating in winter, therefore being inactive, a trait that could have connected them to a downward trend in markets.