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We have detailed reporting for internet traffic on the Report on Business website and I follow it closely. The most popular stories often provide useful clues about broader investor sentiment.

Sentiment is, of course, a contrarian indicator – the more bullish investors become the lower future market returns are likely to be. The most recent website trend on the RoB site has readers clamoring for advice and suggestions on how to buy the dip in equity markets – my Thursday post “Analyst sees 'once in a decade opportunity’ to buy Canadian REITs” gained more reader attention than any piece I’ve written in my seven years here. This is a negative indicator of forward returns.

The widespread urge to buy stocks implies that many investors believe the worst of the market downdraft is behind us. An April 1 research report from Morgan Stanley strategist Selena Tang, however, suggests this isn’t the case.

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The report, “What do recoveries usually look like?”, begins by acknowledging that the pace and depth of the market decline is highly unusual. For that reason, Ms. Tang grants that the recovery might also be different than market history.

The strategist goes on to note that the COVID-19 pandemic is expected to throw the U.S. and global economies into recession and this is not good news for equity markets. She writes, “bear markets which saw recessions begin within 12 months after equities peak have historically been more severe than those not associated with growth contractions – the median drawdown was 48%.”

Investors also should not expect a sharp, V-shaped market recovery. Morgan Stanley notes that “of the 17 episodes of 20%+ declines in S&P 500 we’ve identified going back to 1929, only one (1932/33) saw the index recover to prior peaks within a year.”

Past market trends around U.S. recessions do provide investors with indicators that often signal an imminent long term equity market rally. The CBOE Volatility Index (VIX) tends to peak three months before equity market troughs, for example, and commodity prices usually rally at that point. U.S. consumer sentiment has historically hit the cycle lows one month before equities hit a sustainable bottom.

It’s important to remember that the current economic and market environment is different from any post-World War II recession in numerous ways, and the market rebound could be similarly novel relative to history. The available evidence implies that investors should be cautious when adding risk to their portfolios.

-- Scott Barlow, Globe and Mail market strategist

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

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Stocks to ponder

Park Lawn Corp. If there is one thing that should remain relatively constant in good times and bad, it’s death – yet the novel coronavirus pandemic is clearly weighing on the outlook for funeral services. David Berman looks at why, and the prospects for a turnaround.

The Rundown

Has Warren Buffett been snapping up shares this week in Canadian energy stocks?

A curious rally took hold this week, led by the oil sand’s two biggest names – Suncor and Canadian Natural Resources, which rose by 37 per cent and 45 per cent, respectively, in just two trading days. Trading data show an enormous level of buying in those two stocks – about $1-billion worth in two days – rumoured to be on behalf of a single U.S. investor. In stock forums and on Twitter, speculation swirled that Warren Buffett was the man behind the big trade in the oil sands. Tim Shufelt tells us more.

This index provides valuable insight on where markets are heading next

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The Goldman Sachs U.S. Financial Conditions Index has provided valuable investor insight where earnings forecasts have failed. This benchmark uses government and corporate bond yields, U.S. Federal Reserve policy rates and the trade-weighted U.S. dollar index to measure the availability of credit in Corporate America. Scott Barlow looks at what the index may be forecasting now for equities.

My corporate bond is down in value - am I guaranteed my interest payments?

We’re getting a very much unwanted lesson in how bonds work in a financial crisis. Government bonds hold their ground reasonably well, but investment-grade corporate bonds have fallen in price. A reader has noticed this trend in his own portfolio – a bond issued by a real estate investment trust has experienced a “large drop” in value. This reader asks: “Am I guaranteed my annual return if I held to maturity?” Rob Carrick has some answers.

Canada’s worst-performing stocks get a reprieve from the index master’s axe

Canada’s major stock indexes will delay making changes in their membership until June, postponing a quarterly process that would have seen companies shuffled in and out in the midst of the current market turmoil at the end of March. David Milstead reports.

CEOs of these large-cap TSX companies were buying their own stock in last month’s market collapse

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In this time of market upheaval, are chief executive officers of large-cap Canadian companies stepping into the market and purchasing shares of their own depressed stocks? Perhaps surprisingly, only a handful have been doing so this past month. Jennifer Dowty looks at who they are.

Investors look to China for a glimpse of life after coronavirus

China’s recovery from the coronavirus outbreak may hold investable lessons for the rest of the globe, according to fund managers who are closely watching - and have begun cautiously buying - in the world’s second-biggest economy. Read more from Reuters (Free to all readers)

Others (for subscribers)

John Heinzl’s model dividend growth portfolio as of March 31, 2020

This week’s most oversold stocks on the TSX

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Friday’s analyst upgrades and downgrades

Thursday’s analyst upgrades and downgrades

Thursday’s Insider Report: Company leaders make million dollar purchases in these two high-yielding stocks

Friday’s Insider Report: Three stocks directors are selling

Number Cruncher: Five REITs with resilience in tough times

Number Cruncher: Twelve funds out of lockstep with Canadian stocks

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Why Canada’s banks have no plans to suspend dividends despite a global trend of cuts

Others (for everyone)

Canadian dollar forecasts slashed, bracing for recession

Yield-thirsty U.S. investors eye stock dividends as virus fears shrink bond payouts

U.S. healthcare stocks show their defensive allure in ailing market

Globe Advisor

Where can income-starved investors go next?

Are you a financial advisor? Register for Globe Advisor ( for free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation - a powerful tool to help you manage your clients’’ portfolios.

Ask Globe Investor

Question: In surveying the recent carnage, I was looking at my Telus (T) shares and my broker was showing the yield at 2.66 per cent. What happened? I realize there was a stock split but assumed both the stock and dividends would both be halved, leaving the yield the same. Shouldn’t the yield be much higher?

Answer: After a company splits its shares, it sometimes takes brokers and financial websites a few days to catch up. For example, when Telus’s split became effective on March 17, some websites showed that the price was down by 50 per cent! Evidently, these websites hadn’t adjusted their historical Telus stock-price data to account for the split. The timing of this mistake was unfortunate, as it only added to the sense of panic investors were feeling as markets were tumbling on worries about the coronavirus.

Apparently, your broker didn’t adjust Telus’s dividend data, or did so incorrectly. I can assure you that, on a post-split basis, Telus’s next quarterly dividend – payable on April 1 – is 29.125 cents a share (or $1.165 annually), which is half of the previous quarterly dividend of 58.25 cents. Based on Telus’s closing stock price of $21.25 on Friday, the correct yield is 5.5 per cent, which is a lot better than the 2.66 per cent indicated by your broker.

--John Heinzl

Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.

What’s up in the days ahead

Click here to see the Globe Investor earnings and economic news calendar.

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Click here share your view of our newsletter and give us your suggestions.

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Compiled by Globe Investor Staff

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