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If we could be categorized as something cute -- like bunny rabbits or wombats -- I might not mind. But being identified with a massive, short-legged, garbage-eating giant, or a charging male bovine with horns, is not my idea of a fun alter ego.
These days it's particularly irritating because it's the bears who are doing the "I told you so" dance on the stock market's stage. A bear market is defined as a prolonged period of falling stock prices. So bears are the market's ultimate pessimists -- they win when tumbling stock prices trigger discomfort and fear for many investors.
Bears earned their name ages ago, when "bear skin jobbers" were known for selling skins from bears that had not yet been caught. After they "sold" the skins, they would attempt to buy them for less from trappers in order to deliver what they had sold. These were the original short-sellers, and subscribed to the adage "sell first, buy later." The term "bear" eventually was used to describe short-sellers of stocks, speculators who borrowed shares, sold them, then bought the shares back after a price drop and returned them to the original owner.
Because bull and bear baiting were once popular sports in jolly old England, "bulls" were understood as the opposite of "bears." The bulls were those people who bought stocks with the expectation that prices would rise, not fall.
Recently, several other animals have made their debut in investing lingo. Ken Wolf of TheStreet.com believes that the recent correction has investors reacting from a place of fear, hesitation, and indecisiveness -- like "mules": "stubborn... huddled together, waiting for someone to make the first move." Before the correction, Mr. Wolf characterized investors as "wild race horses" moving in "massive herds" accumulating stock. (He also refers to institutions as "elephants" trying to keep up with the stallions.)
Then there's the least pleasant analogy of them all. The animal no one wants to be comes from the old investing adage, "Bulls make money, bears make money, pigs get slaughtered." We haven't heard much oinking in the past few weeks.
Optimistic bulls supposedly see every down market as "a buying opportunity." Bears see high markets as "overvalued." Is the glass half empty or half full?
I'm neither a bull nor a bear -- nor an elephant, mule, or pig. I'm simply a person who invests in the stock market. Bulls buy because they are bullish; bears short because they are bearish. But I don't know what will happen in the short-term. No one does. If we let our investing choices be governed by short-term sentiment, we'll never have any peace of mind -- we'll always be struggling to pinpoint the best moment to buy or sell.
As an individual investor and a Fool, I choose my investments on criteria that are independent of market sentiment. The Foolish Four is an ideal strategy, as it takes all of the guesswork out of the direction of the market. All I need to do is commit long-term to the strategy, and follow the legwork that requires me to turn over my portfolio once a year.
If I want to broaden my portfolio horizons, I can add individual Rule Makers or Rule Breakers to my mix of strategies. When I do, I choose companies that I believe will grow and prosper over the long-term, no matter what the direction of the market's momentum in the short-term.
Finally, who knows if we are truly in a bear market? The biggest problem with knowing for sure is that markets can only be defined in retrospect. As David L. Scott writes in Wall Street Words: "Since security prices are often subject to reversal, it is sometimes difficult to know whether there has been a temporary interruption or a permanent end to a bull market. Thus, whether a bull market is actually in progress at any given time is often subject to individual interpretation."
As William Shakespeare said in Hamlet, "There is nothing either good or bad, but thinking makes it so." The glass is neither half full, nor half empty. It's just a drink. Cheers!