Every type of industry has its own set of terms and expressions. The world of Wall Street is no different. The media regularly reports a bear or a bull market, for example, but the average person is not always sure what these terms mean or why they are used.

Bulls and Bears and Cats

A bull market is when the stock market is rising. No one knows for sure where the term came from, but it is generally thought to have derived from the idea of a charging or stampeding bull as a metaphor for the way stockbrokers bull their way ahead on the optimism of a rising market.

A bear market, in turn, is when the stock market is on a steady decline. A single day drop or even a decline over a couple of days does not make for a bear market. Market analysts usually agree that a bear market is when the market hits a 15% decline. The term comes from the saying “don’t sell your bearskin before you’ve caught the bear,” which refers to the way investors are quick to gamble on selling high and buying low.

A dead cat bounce is the term used when there has been a sharp rise in the stock market that suddenly crashes. The term comes from the phrase “even a dead cat will bounce if it falls hard enough,” and it is interpreted to mean that the rise came from false or inflated expectations. The crash is a return to the economic reality.

Other Terms

There are soft dollars and hard dollars. Hard dollars is the actual cash that needs to be reported on the fund’s books. Soft dollars are hidden within brokerage fees and are not reported. This is the way certain payments are made by investment funds to their service providers.

The golden parachute is the contract agreement for top executives that guarantees a significant severance package should the executive retire, lose the position due to restructuring or corporate buy-outs, or even get fired.

The terms Black Monday and Black Tuesday are ironic. Normally, to be in the black means to be making a profit. But on Black Monday (October 19, 1987) and Black Tuesday (October 29, 1929), the stock market recorded monumental losses.