The traditional wisdom is that the stock market projects what’s going to happen in six months.
Investors want to get in early on a good thing and then get out while the getting’s still good. The game is about seeing where the growth is going to be and keeping just ahead of it.
It’s an impossible game, of course.
But with all the millions of investors making their best guess, the wisdom of the crowd reveals itself, such as it is.
If Wall Street were a social media platform, it would be just so much more noise. But the stakes are high in the stock world, with fortunes won and lost and the IRL value of companies large and small set and reset on a moment-to-moment basis.
So far this year, investors have been looking for safety and putting money into already strong companies like Coach parent Tapestry Inc., Ralph Lauren Corp., Levi Strauss & Co., off-pricer TJX Cos. Inc. and Walmart Inc. — all of which have outperformed the S&P 500’s 9.1 percent gain for 2025 so far.
Some beaten down companies did enjoy a rebound — shares of Kohl’s Corp. have risen more than 18 percent this year — but they are the exception rather than the rule.
Investors justifying sky-high stock prices have to see a future full of even more growth, something the darlings of years past, including Abercrombie & Fitch Co., down more than 38 percent, and Lululemon Athletica Inc., down almost 48 percent, need to prove again.
And succeeding on Wall Street means proving it every day — a proposition only complicated by a retail world that is, well, more complicated.
If it’s not the on-and-off tariffs of U.S. President Donald Trump’s trade war or worries about the Federal Reserve, it’s the rise of artificial intelligence or sagging consumer confidence.
The University of Michigan’s Surveys of Consumers last month reported that its closely watched consumer sentiment index hit 58.2 — down 5.7 percent from July and off 14.3 percent from a year earlier.
It’s a downturn that seems to be hitting most consumers and brands.
Joanne Hsu, director of the Surveys of Consumers, said: “This month’s decrease was visible across groups by age, income and stock wealth. Moreover, perceptions of many aspects of the economy slipped. Buying conditions for durable goods subsided to their lowest reading in a year, and current personal finances declined 7 percent, both due to heightened concerns about high prices. Expectations for business conditions and labor markets contracted in August as well.”
That, along with all the geopolitical uncertainty, makes picking the winners from the losers all the trickier.
Going into the fall, Oliver Chen, an analyst at TD Cowen, gave a primer on retail stocks that saw both consumers and retailers as “on edge.”
Chen recommended “need” retail stocks like Walmart and the stronger “want” companies like E.l.f. in beauty and Revolve in digital fashion.
His least favorite sectors in the market included department and apparel stores like Kohl’s Corp., Macy’s Inc. and Victoria’s Secret & Co. as well as companies like Capri Holdings or Tapestry Inc. that have exposure to sourcing in China or Vietnam.