--- title: Has the Bull Market Come to an End? description: As the economy keeps growing, the market will sour on the sunny, putting a damper on stocks. authors: - name: Paul J. Lim url: https://money.com/author/paul-j-lim-3/ at_money_since: 2014 articles: 104 covers: - Investing - Banking - Business - Economy and Politics - Housing - Identity Theft - Retirement - Taxes social: - https://x.com/pauljlim former_staff: true published: '2014-08-06T02:29:23.000Z' modified: '2024-04-16T04:08:37.000Z' section: Investing tags: - bull market - correction - Economic Growth - Federal Reserve - rally - S&P 500 - stock market - stocks word_count: 419 canonical: https://money.com/has-bull-market-come-to-end/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![140806_INV_endofbull_1](https://img.money.com/2014/08/140806_inv_endofbull_1.jpg?crop=0px%2C2326px%2C2592px%2C1456px&quality=85) *A version of this article ran in the August 2014 issue of* Money *magazine.* The Dow Jones Industrial Average lost another 140 points on Tuesday, wiping out Monday's modest bounce-back from what had been the worst weekly decline in over six months. All told, the index has fallen 4.1% since it hit a record high on July 16. This happened despite some pretty good ([though not *really* good](https://money.com/jobs-report-goldilocks-report-calm-wall-streets-bears/)) economic data, like last week's Labor Department report that the economy added 209,000 new jobs in July. So what's going on? In short, I suspect the bull market has entered its next—and perhaps final—phase. **Why a change of heart is due.** While equities should reflect the health of the economy, there comes a time in every business cycle in which earnings growth—the real driver of stock prices—peaks. S&P 500 profit margins are already at all-time highs. A better job market shows the economy is improving now, but it also hints that wages could rise down the road, weighing on future profits. At the same time, better-than-expected news may lead the Federal Reserve to stop trying to stimulate economic activity. And that’s a big concern in the final throes of a bull when investors are trying to ride that last bit of tailwind provided by cheap credit. **What works during the bull’s final stage.** As risk taking and speculation fall out of favor, shares of big, dominant companies tend to grow in popularity. Today, these big blue chips have another advantage: They’re cheap relative to smaller-company stocks, says Jack Ablin, chief investment officer for BMO Private Bank. Indeed, the price/earnings ratio for stocks in the Vanguard Mega Cap ETF (MGC), which owns only the biggest blue chips in the U.S., is 16.8. By comparison, stocks in the Vanguard Small-Cap ETF sport an average P/E more than 15% higher. **Where to seek shelter.** The natural inclination at this stage is to hide in stable but slow-growing sectors like utilities, since these stocks pay dividends and are likely to fall less in a market downturn. However, economically sensitive sectors such as energy and tech perform surprisingly well in the last 12 months of a bull, according to Ned Davis Research. So take refuge in a fund like Fidelity Large Cap Stock (FLCSX), which has big stakes in both sectors and has beaten at least 90% of its peers over the past three, five, and 10 years. **Related: **[Goldilocks Jobs Report Calms Down Wall Street's Bears—for Now ](https://money.com/jobs-report-goldilocks-report-calm-wall-streets-bears/ "Goldilocks Jobs Report Calms Down Wall Street’s Bears—For Now")Don'tBe Fooled by the Everything is Awesome Market ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/has-bull-market-come-to-end/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Investing", "item": "https://money.com/investing/" }, { "@type": "ListItem", "position": 3, "name": "Stocks", "item": "https://money.com/stocks/" }, { "@type": "ListItem", "position": 4, "name": "Has the Bull Market Come to an End?" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/has-bull-market-come-to-end/#webpage", "url": "https://money.com/has-bull-market-come-to-end/", "name": "Has the Bull Market Come to an End?", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2014-08-06T02:29:23.000Z", "mainEntity": { "@id": "https://money.com/has-bull-market-come-to-end/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/has-bull-market-come-to-end/#breadcrumb" }, "dateModified": "2024-04-16T04:08:37.000Z" }, { "@type": "Article", "headline": "Has the Bull Market Come to an End?", "articleSection": "Investing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2014/08/140806_inv_endofbull_1.jpg?crop=0px%2C2326px%2C2592px%2C1456px&quality=85", "width": 1012, "height": 569, "caption": "140806_INV_endofbull_1" } ], "author": [ { "@type": "Person", "name": "Paul J. 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