Bear

A bear is an operator who anticipates a fall in prices and enters into a contract to sell the shares at current prices, with the hope of buying them back at a future date when the prices fall. If the prices fall as per his expectation, the bear will buy back the shares and thus make a profit. If the price rises on the date of delivery, he will make a loss. Under such a situation, he will have to buy shares at a higher price and sell them at a lower price to fulfil his contract. He may or may not be in actual possession of these shares. The transaction may be either real or notional with settlement of differences only. This is known as short selling.
These speculators are called so because just as a bear keeps its head down, the bear speculator tends to bring down prices through his selling pressure. This is known as bear raid. A market dominated by bear speculators is known as bearish market. In India, bears are popularly known as ‘mandiwala.’
The share market usually shows a decline in prices when the bears operate and sell securities which are not in their possession. When the settlement date comes, the bear will have an option either to close the deal or carry it forward by paying the backwardation charges. If he is able to make a profit on the settlement date, it is called cover. When a bear, whose forecast has not come true, finds it difficult to meet his obligations, it is called bear squeeze. A bull is an optimist, whereas a bear is a pessimist.