A reader asks:
What are some stocks that appear to have been thrown out with the bathwater?
Even with the minor correction in 2026, over the past year the U.S. stock market is still up around 19%.
But underneath the surface there are plenty of individual names that are down a lot.
In the past 12 months nearly 30% of stocks in the Russell 3000 are down 10% or more:
One in five stocks is down 20% or worse. Again, that’s during a near-20% gain in the overall market.
This is the agony and ecstasy of investing in the stock market. There’s always a bull market and bear market somewhere.
There are plenty of household names in the down pile as well.
Let’s go through some stocks by different groups to see where the potential opportunities might lie.
First up, software stocks have been in the AI crosshairs of late. Companies like Adobe, Salesforce and CoreWeave are all in the midst of a crash:
Are these stocks a screaming buy or has AI punctured their moats for good?
You could also look at the private equity managers like KKR, Apollo or Blackstone:
Is the private credit route overdone or is this just the tip of the iceberg before an actual credit event?
You could look at the credit card companies such as Capital One, Ally, American Express, Visa and Mastercard:
These stocks aren’t getting hit nearly as bad, but could this be a foreshadowing of a slowdown in the economy (finally)?
If you enjoy even bigger drawdowns in the finance space, the fintech stocks have gotten pummeled much worse:
Robinhood and Coinbase are surely feeling the pain from the crypto crash while Block (formerly Square) has been in a nuclear-level drawdown for a few years now.
Feeling lucky?
How about some blue chip companies with eternal brands that are well off their highs?
Nike, Disney and Target have all been in multi-year declines of near-catastrophic proportions:
There are mega cap stock in the hurt locker as well. Microsoft, Meta and Netflix are all down nearly a third from their highs:
I’m not very good at picking through the rubble like this but BB gun to my head, the mega caps are probably the safest bet.
These stocks have all experienced huge drawdowns in the past and have always snapped back. Maybe it won’t happen this time…I don’t know.
Bottom fishing is intriguing because there are plenty of historical examples where a stock gets killed and comes roaring back from the dead.
This is the dream for contrarian investors.
However, here are some words of caution if you plan on bottom-fishing in bombed-out names:
- You might need to be patient. Very patient.
- You need a plan beyond buying what’s gone down in price. What’s the company worth? Maybe it’s down for good reason.
- Unless you get extremely lucky you’re never going to time the bottom perfectly. Plan accordingly.
- Being a contrarian investor can be lonely because other investors love piling on the worst names and telling you why it’s dead money.
- Not all individual stocks come back. In fact, most stocks aren’t great over the long run.
- Trends can last much longer — in both directions — than most investors assume possible.
Jeff Bezos once said, “Contrarians are usually wrong.” That’s not a bad baseline.
Bottom fishing can be fun but it’s not for the faint of heart.
I covered this question on this week’s all new Ask the Compound:
We also answered questions about the Mag 7 sell-off, 24/7 trading, why valuations are higher and how to produce financial content as a financial advisor.
Further Reading:
How to Own the Best Stocks
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