It's a financial jungle out there – decoding stock market terms
(NC) Keeping up with financial markets can sometimes feel like a visit to the zoo. To help you navigate business news with confidence, RBC Direct Investing put together a cheat sheet of animal-related terms for investors.
Bulls and bears
Here's the gist: bull is a reference to the way bulls attack, horns up. Bears, on the other hand, attack by drawing their paws downward. The direction of the attack correlates to the way markets are moving. Broadly, a bull market means optimism is high and prices are generally rising, usually over months or years. There can still be downmarket days or months, but the overall trend remains up. A bear market, meanwhile, applies when there's a prolonged period of falling prices and pessimism.
Doves and hawks
References to doves and hawks take flight when we hear from central banks. If a central bank statement is dovish, that tends to mean there’s pessimism about economic growth prospects. Conversely, hawkish central bankers are generally optimistic about economic growth.
The ostrich effect describes investors who tend to ignore tumbling stock markets or tough financial situations. They'd much rather stick their heads in the sand (so to speak) to avoid seeing any big declines in their portfolio.
Black swans are relatively rare — just like the market events named after them. In the financial world, black swans represent unpredictable, massively transformative events that can shape the world — and in turn, the investment landscape.
You won’t find them at the zoo, but in the business world a unicorn is a privately held startup company with a valuation of $1 billion or more. As the story goes, the term was first used in this context in 2013 when startups valued at over $1 billion were considered as rare as unicorns.
Find more investing inspiration at rbc.com/inspiredinvestor.