As last year’s holiday season was kicking off, I cautioned investors for the second year in a row to beware of the traditional retail sector. Since then, things have gone from bad to worse. This earnings season has been an unmitigated disaster, with one retailer after another turning in disappointing reports. Gap, Nordstrom, Macy’s, JC Penney, Kohls, and others have all dropped precipitously.
Some contrarian investors who buy out of favor stocks in out of favor industries have started calling a bottom for these companies, positing that the recent selloff provides an attractive entry price for long term investors.