Definition: A person who is pessimistic, believing all or part of the market is headed lower. It also refers to the market itself that is trending down (ie, a bear market).
Example: Jen follows financial and economic events daily. She sees signs of deterioration in the economy everywhere she looks. As she watches the unemployment rate increase and sees more stores closing, she becomes more bearish. She takes steps to protect her investments from a drop in the value of stocks.
Investeach explains: A bear attacks by swatting its arms downward on its prey, earning it the name for investing pessimists. A bear can make money as stocks fall by selling short. More advanced investors can also protect themselves from losses and even make money when stocks and markets fall by buying put options.
Riddle me this:
1. In what direction does a bearish person think the market is headed?
2. How can a bearish person make money if her beliefs about the market’s direction come true?
3. Why was the bear chosen to represent a falling market and the people who believe it will continue?
Related terms:
Selling short, Put option.
Opposite of:
Bull.