If 2008 is the Year of the Rat for China, it could well be the Year of the Bear for Russia. After Vladimir Putin stepped down as president, his nominee Dmitry Medvedev succeeded him following a landslide electoral victory. The name is interesting, because Russian “medved” means bear. The name has a link with India too. Bears are fond of honey, and “medved” literally means “honey eater”; the first syllable, Russian “med” (pronounced “myod”), can be traced to the Sanskrit madhu, honey. The word survives in modern English as “mead”, a mixture of honey and water.
But here, we are concerned with another kind of bear— the two-legged ones that haunt our markets. The bear appeared on the scene early in the 18th century, with the South Sea Bubble, when the London Stock Exchange became active. According to Brewer’s Dictionary, bears were people who “sold bear-skin before they had caught the bear”. In other words, they were brokers who contracted to sell shares of the South Sea Scheme at a stated price, and made a profit by buying the shares later at a lower price.
On the other side, there is the bull, an optimist who believes that prices will rise, and therefore, buys stock. Bull market (OED 1891) and bear market are terms that represent the market sentiment at a given time. A bull market is also known as a bull run.
There are different views on the origin of the two words. One story attributes the origin of bulls and bears to the names of two banking families, the Barings and the Bulstrodes; but that has been questioned because the term bear was in use even before the founding of Baring Brothers. Another suggestion is that after the word bear came to be widely used, the word bull was introduced as an elegant coinage to make an alliterating pair with it. English has several such pairs: for example, kith and kin, cash and carry, sum and substance.
A third view is that the words got their meanings because of the way the two animals attacked the enemy. Bulls use their horns to propel the victim upwards, and bears use their paws to hold the enemy down. The origin that traces the word to the London Stock Exchange of the early 18th century and the bearskin jobbers who operated there seems to be the most credible. Turning from bulls to cows, the term cash cow is widely used to refer to a dependable source of plentiful funds, or to a business unit or product or service that generates profit steadily. The income thus raised can finance a company’s business in other areas.
But the bovine connection with finance goes back to ancient times. “Pecuniary”, which means pertaining to money, is a “cow word”. The first part of the word, “pecu-”, is derived from Latin “pecunia”, money. This, in turn, goes back to Sanskrit “pasu”, meaning cattle. In primitive times, before coins and paper money came into use, a family’s wealth was measured in terms of livestock.
Though the leading characters in the stock market drama are bulls and bears, there are other animals that have roles to play. A 1985 phrase, which has been widely used in recent times, is “dead cat bounce”: This term refers to a moderate rise in the price of a share after a precipitous decline. A cat proverbially has nine lives, and no wonder it appears to bounce back after its steep fall. The Investopedia website warns against taking this as a market reversal, and calls it “a bear in bull’s clothing”! Merriam-Webster Collegiate Dictionary (2006) included this phrase in its list of new words for the 11th edition.
Bulls and bears are almost always active, and can be busy in volatile markets. Occasionally, the action thickens and the stock exchange is roused from its routine by a move by a bigger company to take over a smaller one. Several animal terms have come into use to describe these situations. After identifying the prime target for a takeover, the next step is called a “bear hug”. The Encarta dictionary defines this term as “warning of intended corporate takeover: a warning given by one company to another of its intention to assume control of the other.” The bear hug often entails the offer of a premium so attractive that the management of the target company is virtually forced to accept it.
The target company may use other tactics to check the acquisition bid. One strategy is called “lobster trap”. The target company passes a resolution, which will prevent intending acquirers with more than 10% ownership from turning their convertible securities into voting rights.
The target company may see the acquirers as sharks waiting to pounce on it, and the measures taken by the company to prevent a hostile takeover are called “shark repellents”. This is also called a “porcupine provision”, aimed at discouraging unwelcome takeover bids.
A few other animal terms can be included here. When a stock market event seems to prognosticate some future development, in the form of an early warning of danger, it is called a “canary in the coal mine”: Miners took a caged canary into the mine and if the bird died, they knew the mine was not safe. A stock that can be seen as an indicator, reflecting the performance of the market as a whole or of a given industry, is called a “bellwether stock”. A bellwether is the sheep with a bell hung from its neck, the leader of the flock.
Finally, our canine friends: We have stocks called Dogs of the Dow. This refers to an investment strategy advocated by Michael O’Higgins. He recommended investing in the 10 Dow Industrial stocks with the highest dividend yield and lowest prices at the end of December. It is a buy-and-hold approach, and the portfolio is not reviewed till the next December.
V.R. Narayanaswami, a former professor of English, has written several books and articles on the usage of the language. He will look at the peculiarities of business and popular English usage in his fortnightly column.
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