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Stochastic (from the Greek στ?χος for aim or guess) is an adjective that refers to systems whose behavior is intrinsically non-deterministic, sporadic, and categorically not intermittent (i.e. random). A stochastic process is one whose behavior is non-deterministic, in that a system's subsequent state is determined both by the process's predictable actions and by a random element. However, according to M. Kac[1] and E. Nelson,[2] any kind of time development (be it deterministic or essentially probabilistic) which is analyzable in terms of probability deserves the name of stochastic process.

Bears and Bulls

Terminology used by stock brokers and Wall Street insiders tends to be rather complicated what with jargon such as margins, small cap, and indices, it can be difficult to tell what the devil these people are talking about. Still, the most basic of stock market terms, "bull" and "bear," date back to the 19th century and are not tied to any complicated mathematical analysis.

While the origin of the terms might be somewhat vague, their definitions are quite precise. "Bull" refers to an investor who believes that a market or individual stock issue will rise in value. A "bear" is someone who believes the opposite, that the market or stock will drop in value. Generally, a rise or fall of 20 percent is the benchmark for describing a bull or bear market.

Bear Came First

According to people who research this type of thing, the term "bear" came first and dates back to the 17th century from the proverb that it was unwise "to sell the bear's skin before one has caught the bear." By the 18th century, the term "bear skin" was shortened to the familiar "bear" and was applied to stock being sold by a speculator. The term came into common usage among financiers in 1720 during a financial scandal known as the "South Sea Bubble" that revolved around a speculative investment scheme involving the South Sea Company.

Enter the Bull

This was about the same time the term "bull" made its debut, which originally referred to a speculative purchase of stock on the expectation that it would rise. The earliest recorded use of the term dates back to 1714. It is thought the term gained favor because of its relationship to the other animal term "bear."

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