Bulls and Bears, Oh My!

Q What do the terms "bull" and "bear" mean?

— T.R., Escondido, Calif.

A You're a bull, or "bullish," on a particular stock or the market if you expect it to go up. A "bear" is pessimistic, expecting a drop in the near future. No one really knows for sure what the market will do in the short term. But in the long run it has tended to go up, so we're long-term bulls. Over many decades, the stock market has averaged about 10 percent per year — and that's despite market crashes, world wars and the Great Depression.

Q Does a company get our money when we buy stocks through a brokerage?

— H.W., Erie, Pa.

A Not really. Stocks are a little like trading cards. When a company like Topps sells a pack of gum with cards in it, Topps gets its money from the buyer. But after that, the cards may be traded between many owners, going up and down in value, with Topps never getting a penny more.

When a company first issues shares of its stock, in an initial public offering (IPO), it collects its money for them, based on their estimated value at the time. After that, the shares are typically traded on major exchanges.

The buyers and sellers exchange money, and middlemen such as brokerages take a cut, but money doesn't flow to the company. In fact, if the company pays a dividend, it will be paying out part of its income to shareholders each year.

Companies do occasionally execute "secondary" offerings of stock, collecting money when those new shares are released into the market. But after that, the shares once more are simply traded between investors.

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