There is a lot of talk on the stock market about bulls, bears, and pigs. But what does the saying bulls make money, bears make money, pigs get slaughtered mean? And who said it anyway?
Today, we will explore the meaning behind this famous quote and what it means for investors.
What is the meaning of bulls make money, bears make money, pigs get slaughtered?
First, it can be helpful to identify what a bull, a bear, and a pig are when it comes to stock market investing. A bull market is one where prices are rising and optimistic investors are buying. A bear market is the opposite - prices are falling and pessimistic investors are selling. And a pig? Well, that's an investor who is greedy, acting recklessly, and often taking on too much risk.
Now that we know what each term means, let's explore the meaning behind this famous quote. Bulls make money when stock prices go up, bears make money when stock prices go down, but pigs get slaughtered when stock prices go down. In other words, it's important to be careful with your investment decisions - don't be too greedy or you may end up losing everything.
When the price goes up, you can make money simply by buying and holding the investment. In this situation, you can be considered a 'bull'. You can also make money in the stock market if the price goes down by short-selling or using other strategies. In this case, you would be considered a 'bear'.
Some characteristics of a 'pig' in the market would be:
- Taking on significant leverage
- Shorting a stock and spreading misinformation
- Buying at the top due to greed
If they take on significant leverage they can get slaughtered if the market crashes. If they short a stock and spread misinformation about the company to drive the price down they can get slaughtered when the truth comes out.
This can also ruin their reputation. Buying at the top can also be dangerous if the stock price starts to crash soon after.
Pigs are also domesticated meaning they follow orders and are not able to think for themselves. This is why they get slaughtered because they blindly follow what others tell them and can't make their own decisions.
This can be seen when they are sold on investments rather than becoming financially educated themselves. They can also follow the crowd into the slaughterhouse of the next hot stock.
Who said bulls make money bears make money pigs get slaughtered?
Anthony M. Gallea's book entitled "Bulls make money, bears make money, pigs get slaughtered," can be credited with this phrase. Gallea is a financial consultant at Morgan Stanley. His book outlines strategies for success in the stock market and is full of financial education.
Who said pigs get slaughtered?
This phrase has become popular among investors because it's a simple way to remember that taking on too much risk can lead to big losses. It is an old industry saying and it is difficult to pinpoint the origin. There have been many variations such as the one below.
Pigs get fat, hogs get slaughtered
This business quote shows how greed can lead to bad decisions. When investors get greedy they often make careless decisions that can lead to big losses. Here is the full stock market quote:
“Just watch. Pigs get fat, hogs get slaughtered. When you try to take it too far, people turn the other way. I’m just telling you, when you’ve got a good thing and you get greedy, it always, always, always, always, always turns on you. That’s rule No. 1 of business.” - Mark Cuban
The Shark Tank billionaire investor analogizes pigs to those who get greedy in the stock market and end up getting slaughtered when prices fall.
So there you have it - the meaning behind this famous quote and what it means for investors. When it comes to the stock market, be careful not to get too greedy or you may end up losing everything.