Long entrenched in Wall Street vernacular is the concept of bulls and bears. To be bullish on an asset or the market is defined by the hope that the asset or index will rise. To be bearish implies the exact opposite. There is no definitive record of the phrases being adopted and developed, however there are a few indicators that at least help us begin parse out the origin. The garish sport of bull fighting has long been practiced around the world as well as a similar blood sport of bear baiting. Many times the two animals would find themselves head to head in the arena. The bull’s fighting technique was consistently the upward thrust of its horns as it would try to gore its opponents. Opposite to this fighting style was the bears whose fighting stance relied on standing on its hind legs and swiping down on opponents with its paws.
Bear Markets are defined as a pull-back in an asset or a market that results in a decline of at least 20% from peak to trough. Corrections are much less severe and are defined as a pull-back that results in at least 10% decline from peak or trough in an asset. Corrections and bear markets are normal and should be seen by investors who have cash or bonds on the sidelines as a time to consider purchasing good companies at an attractive price, increasing the margin of safety for owning an asset class, or company.
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