They may have invested poorly. They may have to pay out more in interest than they get in interest because the short rates are higher than the long rates and mortgages are based on long rates while depositors get paid on short rates. They may have made bad loans that now have to be written off. Because so many of these things can go wrong at banks, these companies tend to sell far more cheaply than other stocks. They sell cheaply because they can miss their numbers because of more than just simple supply and demand.
Retailers blow up fairly regularly in a slowdown.
That's because they have anticipated robust times and taken down a lot of merchandise that is now not moving. Again it has to be cut in price to move so earnings go still lower. Be sure to check back tomorrow for more on specific industries in Part 3. At time of publication, his fund was long Nokia calls, short common. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time.