The news media, not unexpectedly, is aghast over this week’s stock selloff. The fastest correction in history! $3.6 trillion in market value “erased!”

Let’s put the correction in context. Last year, the S&P 500 posted a 30% total return. That’s what you might call a dose of irrational exuberance.

As Mark Decambre of MarketWatch points out, Coronavirus isn’t the only factor driving the weak’s selloff. Recession fears, rising bond prices, election jitters and high valuations also played a role. 

James Mackintosh at Barron’s says that even if the pandemic fears wiped out profits for a couple of quarters, that would only justify a “small drop in share prices” as long as profitability is expected to bounce back and firms have the financial resources to weather the storm.

As for me? I’m not ready to jump in and buy on the decline yet. I added a bit to my holdings of Clearway Energy (CWEN) and Wells Fargo (WFC), two attractive dividend payers that I think have room for share appreciation. Time will tell if I’m chasing stocks down too early, but I’m keeping most of my powder dry in case better buying opportunities emerge. 

Were I looking to ad a new name to my portfolio, say something that has sold off heavily in the wake of the coronavirus, I’d take a close look at Carnival (CCL). After this week’s selloff brought the stock down 37% since the start of the year, the dividend yield stands at 6% and the P/E at a mere 8. It’s tempting enough that I plan to keep CCL on watch. The stock is down 37% since the start of 2020.

It’s tempting to book a cruise right about now. No doubt prices are attractive.

 

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