What is Bullish?
Updated: Jul 15, 2021
Bullish Meaning
Bullish is the term used to describe a positive sentiment about the market, an industry, or even an individual asset. This short-hand method is used by investors to quickly communicate their optimistic opinions, simply and easily.
Bull, Long, and Hawkish are all terms that can replace, and interchange with ‘bullish’. All holding positive under-tone in their meaning, they’re all used when an investor is hopeful to see a rise. Learn what bullish means, why it’s used by investors, and when you should use it.
Definition and Examples of Bullish
A bullish investor holds the belief that the value of a whole market or even an individual security will rise in the future. To be considered a bull market, indices, like the S&P 500, must experience a rise of at least 20% over two consecutive months.[1]
Bulls are seen as positive players in the market, who seek to make money from prices going up. “My colleagues are bullish on NFT’s”, for example, means that his colleagues believe NFT prices will climb higher in the future and maybe seeking to profit from that opinion. [2]
Hawks, or being hawkish, is a bullish subsidiary term that is exclusively used to represent individuals who believe interest rates will rise in the future. It can be used to describe a person, “My boss is hawkish” or a collection of opinions, “the Bank of England board are hawks”.
On the flip-side, an investor who is bearish, bear or hawkish is someone who believes the market, securities or interest rates will decline in the future. Bulls and bears are seen to be polar opposite opinions, similar to optimism and pessimism, insinuating long vs short positions.
Alternate names: Bull(s), Long, Hawkish, Buy
How Bullish Works
Being bullish is a positive belief of the future. It simply works by confiding that the market in the future will exceed the market of today.
Back in 2011, Warren Buffet and Charlie Monger, for example, took a bullish stance on Bank of America (BAC) after its shortcomings with the subprime mortgage crisis. Noticing the BAC share price had halved, from around $20 per share in 2010 to just under $8 per share in 2011, the two accumulated over $5 billion shares. In 2017, Buffet cashed in on his purchase pocketing over $12 billion - a prime example of bulls, making a bullish decision on a security, going long, and profiting from their decision.[3]
The term ‘bull’ however has existed long before Buffet’s adventures. It first appeared in the 18th century, exclusively used to describe individuals speculatively buying stocks they think would be more valuable in the future. It came as a fitting nemesis to the bear, which was notably termed much earlier in history to refer to someone selling “bearskin” - later shortened to ‘bear’, which was used to describe any seller in the market - birthing the bull vs bear eternal tug-of-war. [4]
Bullish vs Bearish
Bullish and bearish are two sides of the same coin. Bullish is a positive expectation of rises in the future, whereas bearish is a negative expectation. If an investor is bullish about a particular stock, they are likely to take a long position. Whereas if the investor is bearish about that same stock, they are likely to take a short position.
What does It Mean for Investors?
Understanding the lingo of the investment world will make communication with like-minded individuals an easier activity. Whether it be to quickly explain your position, or to describe a market condition, bullish is the optimistic word of choice.
Article Sources
U.S. Securities and Exchange Commission. “Bull Market, https://www.merriam-webster.com/words-at-play/the-origins-of-the-bear-and-bull-in-the-stock-market.” Accessed July 12, 2021.
Corporate Finance Institute. "Bullish and Bearish, https://www.merriam-webster.com/words-at-play/the-origins-of-the-bear-and-bull-in-the-stock-market." Accessed July 12, 2021.
Berkshire Hathaway. “Berkshire Hathaway. “Shareholder Letters (2011), https://www.berkshirehathaway.com/letters/2011ltr.pdf" Page 3. Accessed July 12, 2021.
Merriam-Webster. “The History of ‘Bull and ‘Bear’ Markets, https://www.merriam-webster.com/words-at-play/the-origins-of-the-bear-and-bull-in-the-stock-market.” Accessed July 12, 2021.
