Bears, and Bulls, and Investing…Oh, My!
Have you ever watched the news or listened to the radio with your parents
and heard the reporter talk about the “bull market” or the “bear market”?
Then you realized that they were talking about the stock market and
businesses, such as car companies. In fact, they were talking about
investing. In investment terms, here’s how we define a bear and a bull:
Bear – Stock market “bears” are investors who expect prices to fall, so they
sell stock they don’t own yet. The “bears” hope that the price will fall by the
time they actually have to buy the stock and deliver it to their buyers. This
action is called “selling short,” and the “bears” hope to make lots of money
by doing this.
Ask your mom and dad if they
are more like a bear or a bull
when it comes to investing.
Bull – Stock market “bulls” are investors who expect prices to rise, so they
purchase a security or commodity in hopes of reselling it later for a profit. A
bullish market is one in which prices are generally expected to rise.
Why? No one is really certain why people mention animals when they’re talking about the stock market, but
two stories are used to explain this. See p. 2.
Why Should You Save at a Credit Union?
You should save money at a credit union, because:
1. At most credit unions, you can open a savings account (also called “share” account) for less than
$20!
2. You can earn money on the money that you deposit—and that helps you save even more!
3. A credit union is a safe place to save your money. The amount in your savings account (up to
$250,000) is insured.
If you haven’t put any money in your account in a while, what are you waiting for?
Celebrate International Credit Union Day on Thursday, October 21, 2010! Make a deposit in your account!
Bears, and Bulls, and Investing… (Continued)
These stories are used to explain why people mention
animals when they’re talking about the stock market.
First, there’s a proverb “Don’t sell the bearskin before
you’ve caught the bear.” Back in the day of hunting bears
and selling their skins, the middlemen that were involved in
the sale of bearskins would sell skins that they had not yet
received from the trappers. (Think about that; they sold
something that they didn’t even own yet.)
How did the middlemen know what to charge? They didn’t; so
they guessed what trappers would charge. That means they
were guessing what the future price of skins would be. The
middlemen hoped that they would pay less money to the
trapper than they (the middlemen) had charged someone.
That way, the middlemen would make more of a profit. Selling
before they knew the price was risky, because the trapper
could charge more money than the middlemen had charged.
Then the middlemen would lose money.
These middlemen became known as “bears,” short for
“bearskin jobbers.” The term stuck for describing a decrease
in the market (just as these middlemen wished for the price of
the bearskins to drop). Finally, since bears and bulls were
widely considered to be opposites due to the popular sport of
bulls fighting bears, the term “bull” was used as the opposite
to “bears.”
Second, the terms “bear” and “bull” come from the
methods in which each animal attacks its opponents. For
example, a bull will thrust its horns up into the air, and a bear
will swipe down. This action was related to the movement of a
market. If the trend was up, then it was a considered a bull
market; if the trend was down, then it was considered a bear
market.
Credit union information here…
Stock Splits
When you’re watching or listening to the
business news (perhaps for a class or just
because you want to learn on your own),
you might hear about a split announced
for a stock.
When a stock splits, the number of shares
is multiplied but the total value remains
the same. For example, if a stock splits
2-1, the number of shares doubles. Let’s
say that a company had one million
shares, and each share was valued at
$1.00 per share. After the 2-1 split there
would be two million shares, but each
share would be valued at 50 cents per
share.
The purpose of a split is to lower the price
of a stock, making it more accessible to
the general population. The directors of a
company make this decision.
3 Shopping Tips to Help You
Get a Head Start on the Holidays
1.
Make a list of what to buy each
person—and a dollar amount to spend
per person.
2.
Plan ahead. Start watching for store
sale flyers.
3.
Check and compare prices among at
least five different sources (in-store or
online) for the best values.