Here's What Historically Happens To Stocks When Bull Markets End

Authored by Jeff Clark via,

You undoubtedly know that 2017 was a record-setting year for the broad stock markets. And while gold was up last year despite numerous headwinds, most mainstream investors aren’t paying much attention to gold since they keep seeing so much green in their stock portfolios. 

Even I was taken back by some of the data from the bull market in stocks…

  • The Dow hit a record high 71 times last year. On average, a new high was hit more frequently than once a week.

  • For the first time ever in its almost 90-year history, the S&P 500 rose every month in 2017. And historically there have only been four years with gains in 11 months of the year.

  • The S&P’s largest pullback in 2017 was 2.8%, the smallest since 1995.

  • To start 2018, the S&P 500 has risen in each of the five trading sessions, hitting a new record high every day. The last time the index opened the year with at least five straight record highs was 1964.

  • And as Mike pointed out in his 2018 predictions, the CAPE (Cyclically Adjusted Price-Earnings) ratio has now matched its 1999 level, the second highest reading in over 100 years of data. The CAPE now has a higher reading only in 1929.

This all begs the question: is the bull market about to come to an end? This is exactly the kind of frothy behavior a market sees near its apex, so it’s definitely a prudent question to ask. If last year ends up being the top of this bull market, what does history say could happen to stocks this year?

We dug up the data for all bull markets in the S&P since the year 1900, and then examined what happened in the very first year after each of those bull markets ended. In other words, what did the first year of the bear market look like after the last full year of the bull market? This could be useful data, if 2017 ends up being the peak of the bull market.

Here’s what history shows.

First Year Performance of Bear Market After Bull Market Ends

While the declines for the first year of the bear market varied greatly, you can see that on average, the S&P lost 16% the year immediately following the last year of the bull market. Also notice that in only four cases was the decline measured in single digits—all others were double digit losses.

Mike Maloney believes this is the year overvalued stocks begin their descent. If he’s right, the decline could be higher than the historical average, since this is the second longest bull market in history. 

And what is gold likely to do in that environment? We’ve shown before that gold has acted as a buffer—and gained ground—in most of the biggest stock market crashes. 

The bottom line for us is that we think a major shift is coming, not just in overpriced stock and bond and real estate markets, but in the currencies that have been abused by many central bankers the world over. Once the process gets underway, the mainstream will turn back to mankind’s oldest form of money in mass, and our patience and forethought will pay off.

Mike and I continue to buy physical gold and silver.

If you’d like to follow our lead, you can pre-order 2018 gold Eagles and silver Eagles now, with both estimated to ship on January 19.


IH8OBAMA Mon, 01/15/2018 - 17:06 Permalink

"If last year ends up being the top of this bull market ..."

Jeff, how can last year end up being the top of the bull market when we've already made new highs in 2018?


LawsofPhysics Mon, 01/15/2018 - 17:13 Permalink


If only "ifs" and "buts" were candy and nuts, we would all have a merry Christmas Jeff, you useless paper-pushing fuck.

No way no how a mechanism for true price discovery will be allowed.

eventually all that "stimulus" will find its way to main street.

in the meantime...

"Full Faith and Credit"

ConnectingTheDots Mon, 01/15/2018 - 17:15 Permalink

Pretty creepy picture used for this article. Shows just how inhumane we are to other beings (and also humans). The picture is probably the end result of a bull fight, and bull fights are also staged for profit ( of a few).

zzzz88 Mon, 01/15/2018 - 17:32 Permalink

many people overlooked one important thing--

last year, stock market rose more than 20%, but dollar dropped 10%. if we put them together, stock market only rose about 8% in foreign currency. 

all are manipulated. 

USofAzzDownWeGo Mon, 01/15/2018 - 17:32 Permalink

People keep failing to point out the fact that the central bankers have complete control, 100% of the markets since 2009 unlike never before. They are the system, why would they crash it or let it? Rates has risen while other countries are neg rates still or at 0... and the USD crashes. The game is rigged and the central banks have never had this much control of the direction. Unless they really want a crash to  occur, it'll never crash. They're gonna keep printing to infinite and ramping stocks up. 

Soph Mon, 01/15/2018 - 17:53 Permalink

Meh, as long as central banks are on the bid, this bull has a long way to run.

-- Japan will be going hard on equities now that the USD is tanking

-- The Swiss had a huge year, and will keep the equities buy going

-- Norway's coming into the equities game hard

-- ECB only hinted that they might, maybe, change direction and quit the money printing...yeah, in the current environment I find that as likely as pig's flying too

-- The US is tightening, if you can call it that. So far it's gone from absolutely absurdly low interest rates, to only absurdly low interest rates. Long way to go before its meaningful.

-- and as their exports get squeezed China is going to have to devalue the shit out of the remimbi soon in light of their recent policy position.


Central banks are staying on the equities bid. This bull has lots of legs still. 10% pull back max...max! Which is sweet f$&k all, and long overdue.

Absolutely no bear around the corner.


Uncoy Soph Mon, 01/15/2018 - 18:12 Permalink

Don't agree with your hypothesis but it's well-reasoned. The wildcard here is world war. What happens to the markets when some of these flash points go really hot. Syria, Lebanon, Donbass, Iran, North Korea, South China Sea.

Feels like we're coasting through the bright and sunny days of 1913 right now.

In reply to by Soph

razorthin Mon, 01/15/2018 - 19:16 Permalink

Am I missing something?  I thought markets always go down when bull markets end.  Isn't that the definition?  Oh wait, this time might be different.

Let it Go Tue, 01/16/2018 - 07:32 Permalink

Leverage is very high but most investors think that even if things go downhill fast that they will be smart enough to get out of the markets. After the debacle in 2008 where they saw the market take nasty and violent swings they learned a few things, this time, they figure they will make the right moves before it is too late. But what if it hits like the flash crash on steroids?

Imagine a scenario where the if the market falls like a flash crash on steroids investors are trapped. They have been assured that can't happen because circuit breakers have been put in place to arrest panic style moves but if trade is halted, and the market simply does not reopen for days or even weeks suddenly it is a new game. As remote as this might seem the article below explores this possibility and the far-reaching ramifications.

 http://Flash Crash On Steroids Is Possible .html