Metaphors be with you in the markets

A recent cartoon in the New Yorker puts it best. In a television studio, a newsreader solemnly delivers the latest report from the financial world: "Bad news on Wall Street today, as the bottom fell out of the market, the sides collapsed and the top blew away."

It has been a terrible few months for the stock markets. In May, the FTSE-100 share index was hovering contentedly around 5,200 and the Dow Jones was holding above 10,000. But a combination of accounting scandals, weak earnings reports and war jitters sent shares tumbling on both sides of the Atlantic. Two terrifying falls – one in July, the other in September – brought the FTSE down to just above 3,600 and trimmed the Dow by a quarter. The collapse affected not only individual investors but also pension holders, who watched their savings disappear. To some observers, the markets' dive even made a mess of the Labour government's spending plans.

But not everyone has been hurt. The men and women who claim to understand the movements of the market have done rather well out of the collapse. The lower share prices fall, the more they find themselves called upon to explain what is going on and what might happen tomorrow.

The job of the market analyst is to decipher the patterns produced by millions of individual trades and explain them to a panicky public. Analysts must say what the market is doing without actually saying what it is doing, because this is unknowable. To accomplish this difficult task, they use metaphors, some of which are familiar (bulls and bears), others less so (root canals and buying boots). Some of the best are collected here. They prove that although it has been a bad spell for the markets, it has been a golden era for the market metaphor.

Bulls versus bears

The collapse of the stock market can be blamed on the bears. In contrast to bulls, who push the market upwards, bears drag it down. And what do bulls and bears do when they meet? They fight, of course. For much of the summer, the bears had the upper hand. But the bulls resisted enough to keep things interesting, and analysts reached for military metaphors.

"It was a hard-fought battle during the early part of the day but London's long-suffering bulls emerged triumphant over the still-ravenous bears yesterday," reported the FT on 18 July. America's bulls were also in fighting form. One market analyst gave a breathless report to the Washington Times: "A beachhead has been established, and the bulls are launching their second assault. Now we must once again repel any afternoon counterattacks from the bears."

A few weeks later, the bears seemed to be in retreat, and bullish analysts were sounding downright cocky. "I don't think the bears are as big as anyone thinks," one experienced trader told The Telegraph. But one market sage cautioned: "Investors should wait until the bear is clearly dead. This one still has a pulse." Indeed, by the end of September, Reuters was reluctantly reporting that "bears are prowling the FTSE once again".

Bottoms and bounces

When the bears are in control, the market goes down. But eventually it hits the bottom. Also known as the floor, this is a level below which shares cannot fall. You might suppose that the bottom of the FTSE is zero, but this is not the way it seems to the experts.

As soon as the FTSE dropped below 4,000, commentators began to speculate that solid ground was not far away. "I think we're getting relatively close to the floor," one anonymous trader told Reuters. An American mutual fund manager agreed: "I think we're reaching for the bottom, if we're not there now." By the end of July, the bottom seemed very close indeed, and analysts began to sound like astronauts trying to land a spaceship: "We're within touching distance of the bottom," one told The Telegraph. "I think there's still room for one last shake-out to take us down a little bit further."

The astronauts were proceeding carefully because, as everyone knows, things BOUNCE when they hit the bottom. As The Times helpfully explained on 30 July: "markets do tend to bounce after a bubble has burst and a market collapses."

Or do they? Two weeks earlier, The Independent had worried: "Even if we are approaching the bottom, it's going to be awfully difficult to bounce back off it." On occasions, a bounce is followed by wilder behaviour. There was a splendid moment in mid-July, when The Guardian reported: "The FTSE-100 index of leading shares bounced up, dived down and finally pulled back up above the 4,000 point mark today." But such wildness is preferable to the bounce that flops. Earlier this week, a trader glumly told Reuters: "We have a little bounce but this market is going nowhere."

Pick'n'Mix

Sometimes the behaviour of the markets is so erratic that it can't be described simply in terms of bears, bottoms and bounces. At such times, a mixed metaphor is called for. Mixed metaphors have been expunged from most quality newspapers, but they return to the business pages when things are looking really bad.

Mid-July was a particularly bad time, and the City's wordsmiths pulled out all the stops. On the 17th, the markets had recovered a little, but the mood was still jittery and the metaphors still mixed. The Daily Mail captured the scene perfectly: "Some welcome scraps of good news set stock markets bouncing higher after the recent carnage. The FTSE-100 got off to a nervous start but, powered by a handful of reassuring company statements in the US, swept back over the important 4,100 milestone."

August was a better month for the markets, and the metaphors sorted themselves out. But by late September, chaos had returned. "American earnings gloom has torpedoed the stock market," reported Reuters. On the 24th, the news agency was utterly at sea – or was it in a battlefield? Or a butcher's shop? "A fresh assault on banks and telecoms has carved £22bn off the FTSE index and sent it swooning to six-year lows as mounting panic about the state of corporate profits ravages share prices."

All coherence gone

When all else fails, there are the wacky metaphors. These are perfectly suited to moments of complete disorder, when analysts are on the verge of despair.

Some wacky metaphors seem to be rooted in personal experience. After the July collapse, a Wall Street trader tried to explain to The Scotsman why the Enron scandal had so shaken the markets. He picked a metaphor that makes perfect sense in New York: "You walk into the kitchen and you see a cockroach – you are pretty confident that it is not the only one around." On 19 September, an equities strategist found a parallel between the state of the markets and the state of his teeth: "It's like going to the dentist for root canal treatment – you hope it can be sorted in one sitting but you keep having to endure more pain every few months."

On rare occasions, analysts dredge up wonderful metaphors that make no sense at all. In late July, The Independent argued that "no sustained rally is possible until the institutions get their buying boots on again." But a prominent strategist explained to The Guardian that the markets' real problem was not footwear, but the size of the furniture: "Everybody's trying to get under the same table at the same time and there's not enough room."

Very rarely will an analyst abandon metaphors entirely. When they do, it's a sure sign of desperation. But it really clears the air. After one especially bad summer session, two commentators from the famously plain-spoken state of Kansas said exactly what they meant: "Friday's lousy stock market capped a lousy week on Wall Street that added to an increasingly lousy year in what has started to look like a lousy decade for stocks."

Now that's telling 'em.