Home » Eng Finance » B » Bear


A Stock Exchange term derived, by tradition, from bear-huntmg, where the trapper would make sure of his market for the skins before setting out to shoot the bears. It refers to a speculator who sells shares forward, that is, to be delivered at a fixed future date – usually the official account day. The bear anticipates that the price will fall and that the shares promised, which at the time of the ‘sale’ he does not possess, can be acquired at a price lower than the selling price when the time for completion of the contract arrives. The bear may ‘carry over’ the contract to the following Stock Exchange account period by paying a form of interest known in the market as backwardiation. Bear activities are not confined to share dealings, though that is where they originated, but are also tobe found in other areas of speculation such as the buying and selling of commodities and foreign exchange. A market situation which favours bear operations is known as a bear market.

Reference: The Penguin Business Dictionary, 3rd edt.