miller@loral.UUCP (David P. Miller) (02/05/86)
I'm very new to the investment world, and I keep hearing about the "Bulls" and the "Bears" in the stock market. To my knowledge, the Bulls are the ones that push stocks as investments, as in "buy" stocks, and the Bears like it when you sell your stock or when the market goes down. Now, who are these Bears ?. Why are they involved in the market if they thrive when it is down ?. Are these bears bond holders, market arbitragers, or people who sell short ?. I'd appreciate any clarifying remarks on this matter. BIG DAVE. -- David P. Miller - Loral Instrumentation. / USUAL \ sdcsvax!sdcc3!sdcc6!loral!miller \ DISCLAIMER / ******************************************************************************** "Sticks and stones may hurt my bones but words ......................."
johnl@ima.UUCP (02/09/86)
Bulls are people who think stock prices will go up, Bears are those who think they will go down. It is entirely possible to make money on stocks which drop. You sell them short, which means that you sell stock that you don't own, planning to buy it later at a lower price. This is a perfectly legitimate thing to do (your broker arranges to borrow the stock for you during the interval from when you sell short to when you cover your sale.) It's harder to make money selling short than just buying stocks you think will go up, since when you sell short the most you can make is 100% of what you paid, while your potential liability is unlimited if the you guess very wrong and the stock goes way up. With regular stock purchases, it's the other way around -- the most you can lose is 100% of your investment but if you're lucky there's no limit to how high it can go. Another thing to do when you're feeling bearish is to sell all your stocks and buy government bonds or something similarly safe, and if you're right you may only be making a little, but your friends are losing their shirts as their stocks plummet (let me tell you about my Eastern Airlines stock which I bought at 12, just before it sank down to 5 1/2.) John Levine, ima!johnl