Animals At The Stock Market

As most everyone knows, the stock market is that place “where shares are issued and traded either through exchanges or over-the-counter markets” at an agreed price. These stocks or shares are securities listed on the stock exchange.

The stock market (also known as the equity market) is one of the most important sections of a market economy. It is one of the important sources for companies to raise money for their expansion or capital infusion.

Sometimes, this market is split into two parts – the primary and the secondary market. New issues are first offered at the primary market. The subsequent trading is done at the secondary market.

Question: Where are the animals coming from?

It is said that on Wall Street, the bulls and bears are in a constant struggle. Actually, the animal names are simply nicknames on certain situations and kinds of people in the stock market business.

Bull

When everything in the economy is in tiptop shape, when people have jobs, when the gross domestic product (GDP) is growing and the stocks are rising – it is a bull market.

This is the time when everything is coming up roses in the stock market. This is also the easiest time of the year to pick stocks because everything is going up.

Bull markets cannot last forever, though. Because things were looking good in the bull season of the market, it sometimes can lead to dangerous situations if the stocks become overvalued.

The “bull” connotation had jumped fence and is now into mainstream lingo. If a person is optimistic and believes that stocks will go up, that person is called a bull. His attitude had been called all these years as having a “bullish outlook.”

Bear

The bear is the opposite of the bull. In a bear market, recession is looming and the prices of stocks are falling. Bear markets is a tough time for investors to pick profitable stocks.

Some experienced stock brokers sometimes resort to making money. They would use a technique called “short selling.”

Another strategy is to wait out the bear market on the sidelines, anticipating the return of the bull market. If a person is pessimistic or thinks the stocks are going to drop again, that person is called a “bear”, and is now labeled as having a “bearish outlook”.

Chicken

Chickens are those who are deathly afraid of losing anything. Their fear blankets their need to make profit. Consequently, they would turn only to money-market securities. (Some get out of the market entirely.)

While it is true that one should never invest into something which you will lose sleep, it is also true that you will never see any return if you avoid the market completely and do not take risks.

Pigs

Professional traders love the pigs – it is from their losses that the bulls and the bears collect their profits.

Pigs are those investors who love high risks, and are always looking for that one big score in a short period of time. They buy on hot tips and invest without doing thorough research.

Usually, they are impatient and greedy about their investments. They are usually drawn to high-risk securities without putting time and effort to learn about their investments

Assuming these animals’ characteristics in the stock market, what kind of investor would you be?