Contrarian investors may be excited by the latest Bank of America (BofA) fund manager survey, which shows that sentiment is truly on the floor right now. The collapse in sentiment is "historic", the bank says, with investors taking fright on the back of the coronavirus, an oil shock, global recession and "surging" debt default risk.

Cash levels have soared, a record number say corporations are overleveraged, and equity allocations and global growth expectations have seen their biggest-ever monthly collapse. This "extreme bear positioning" suggests widespread panic, and BofA's Bull & Bear Indicator has fallen to 1.7, triggering a contrarian buy signal in risk assets. There have been 17 buy signals since 2000, with global stocks enjoying median three-month returns of 6.6 per cent. Some important caveats, however. The scale and impact of the current global health crisis is "unprecedented", the bank says, so a sustained rally requires further monetary and fiscal stimulus as well as faith that Covid-19 is peaking in Europe and the US.

Not only that, contrarian sentiment signals "can be too early" when a major exogenous event is at play, admits BofA; the Bull and Bear Indicator has a good track record but it also triggered a buy signal in July 2008 – two months before Lehman Brothers collapsed and all hell broke loose.