With each passing week, Canadian portfolio managers are growing more and more optimistic that the worst may be behind them.

Two weeks ago, a massive rally that followed the passing of a US$2 trillion stimulus package was met with caution. That upward movement, after all, could have just been a relief rally, one of many that are usually seen before markets retest their lows and truly bottom out in a bear market. But that momentum has continued to roll into this week after reports suggested the coronavirus outbreak is appearing to slow in hotspots such as Italy, Spain and New York City.

As the S&P/TSX Composite Index entered a technical bull market — it bounced 20 per cent from its low of 11,172 points on March 23 — some are beginning to display a hint of bullishness again.

“Yes, I think we bottomed out,” said Greg Placidi, chief investment officer at Equiton Inc., a Burlington, Ont.-based investment firm. “I’m more bullish than I was last week and I think this market really turned around on (March 24). The equity markets and the bond markets at that point said OK, we’ve gone low enough.”

On Tuesday, the markets appeared to be heading for another solid day of returns before finally losing steam into the close. The S&P/TSX was up 470 points in early trading, but would close up only 21. The Dow Jones Industrial Average was up nearly 1,000 points before closing down 26.

Even if the markets don’t retest their lows — and right now they’d have to slide about 20 per cent to do so — Placidi still recognizes the potential for volatile swings like the ones investors saw today. Although he’s been an active buyer, Placidi has remained strategic by adding positions in leading companies that have been beaten up during the downturn, such as McDonald’s Corp. and Starbucks Corp.

“These core franchises aren’t going anywhere once this is over,” Placidi said. “Starbucks has reopened most of its stores in China and once social distancing is over here, guess what, people are going to go back to ridiculously paying $6 to $7 for a coffee.”

These core franchises aren’t going anywhere once this is over

Greg Placidi, chief investment officer, Equiton Inc.

Barry Schwartz, chief investment officer at Baskin Wealth Management, said that sentiment is turning for his clients as well. Some of them panicked and sold off from their portfolios near the lows. For the past month, he’s gotten used to fielding a crushing number of phone calls from those who were considering the same action. That all changed this week.

“I haven’t had a phone call in two days,” Schwartz said.

Like Placidi, Schwartz now suspects that the markets will not test their lows again. Looking back, the rate of the descent of some of the top names in his portfolio, such as Microsoft Corp. and Amazon.com Inc., both of which stood to benefit from the stay-at-home economy, signalled that the markets had reached maximum pessimism.

As the market leaders in Schwartz’s portfolio continue to rapidly climb back toward their previous levels, some investors worry they may be getting too pricey to buy, he said. Throughout the downturn, investors have been squeamish when it comes to the timing of their buys.

Microsoft is still trading more than 10 per cent below its high when markets bottomed, meaning that Schwartz still thinks it’s a buy. A purchase would’ve been even more justifiable at trading levels two weeks ago, but even after central banks began to inject liquidity into markets and federal governments came out “guns-a-blazing” with stimulus, investors were too concerned to make a move.

“The lesson learned is you’ve got to buy when things feel like they’re at their worst,” Schwartz said. “Don’t be a wimp.”