Richard Drew/AP
- RBC found that despite the coronavirus, investors in late March were the most bullish on stocks since a quarterly survey began in 2018.
- The respondents - majority of whom were institutional investors - shared the themes and sectors they were buying and selling during one of the most volatile periods in market history.
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If there's any time to be bullish on stocks, it's during one of the most volatile periods in market history.
That's the takeaway from a survey of investors conducted by RBC Capital Markets during final six days of March. That stretch was of course the conclusion of a brutal month that saw new coronavirus infections soar, mass gatherings suspended, and swaths of the economy grounded.
Still, investors registered their highest level of optimism ever since RBC started conducting its quarterly poll in the first quarter of 2018. The cohort of 185 professionals who responded included 113 institutional investors, most of whom were based in the US.
Their bullishness during a horrendous time for the markets can be attributed to three main catalysts, according to Lori Calvasina, the head of US equity strategy.
First, investors are enamored by the attractiveness of valuations given that the S&P 500 recently wiped out three years of gains within a month.
The second reason why they are so optimistic is that they believe the Federal Reserve has their backs. Last month, the central bank rolled out its most aggressive stimulus package since the 2008 financial crisis and indicated that there are no limits to its support.
And finally, the survey respondents believe the economic damage from a crisis that is fundamentally health-related will be manageable.
All of these catalysts for portfolios are predicated upon the number of new coronavirus cases slowing and the absence of yet another unforeseen risk. In the interim, investors are sorting through the wreckage to find cheap, quality assets - and making choices about what is not worth owning in the post-crisis world.
The chart below ranks what the investors say they are buying. Top of the list are Tech, Internet Retail, Media & Telecom stocks (TIMT), growth stocks, quality stocks, laggards, and cyclicals.
RBC Capital Markets
Investors are most interested in selling companies with high leverage, consumer discretionary and related companies, energy stocks, and financials.
RBC Capital Markets
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