The Stock Market – Becoming Familiar With the ‘Animals’

The Stock market is the economic backbone of America’s economy. Stocks or securities listings are traded either through exchanges or open markets every day.

The stock market – often referred to as the equity market – is the driving force behind America’s economy, serving as the key to many companies’ money raising or capital infusion strategies.

The market is divided in to two main sectors, the primary and secondary market. New stocks are offered at the primary market first. Later trading of the same stocks takes place on the secondary market.

Animal breeds are used to describe general market behavior, ranging from bulls to chickens. These animal nomenclatures are often used to differentiate situations and people that affect the market.

The Bull Market

A bull market occurs when people have capital to buy consumer products – stocks and the Gross Domestic Product (GDP) are both on the rise.

During bull markets the price of most stocks are on the rise. It can be the ideal time to buy a cheap stock and make a profit selling it later.

While bull markets are a great time to start investing, they simply do not last forever. Eventually, stocks become over valued and quickly lead to a slowdown in the market.

The bull nomenclature has left the halls of Wall Street and is used often in the public realm. People who believe that the market is strong and on an upswing will often be referred to as bulls.

The Bear Market

As mentioned above, when the market is on an upswing, it is called a bull market. However, when it is steadily heading in the opposite direction, this is referred to as a bear market. Bear markets are tough times for average investors to purchase a stock that will turn a profit.

During bear markets many brokers resort to alternative techniques such as “short selling” to make money.

Another strategy that tends to prevail in a bear market is to wait out the down side and hope for a return of the bull market. Investors who believe that market with start to sour are often called bears.

Cautious Investor

Cautious investors are often referred to as chickens. Chickens are afraid of losing money and often only invest in money markets, or stop investing all together.

The Big Loser

Investors who love high risk stocks and are not afraid of losing money are referred to as pigs. Pigs are often the investors who create the greatest profits for stockbrokers. They often look for the “big score” stocks, a stock they hope will have high profits. Such people often invest without doing thorough research and can lose significant sums of money if their investments turn sour.

With all the animals associated with the stock market, it can be tough to differentiate Wall Street from the Bronx Zoo.