October was a traumatic period for equity investors as global markets slumped to their worst monthly performance since 2012.
The previously run-away S&P 500 has been a particular focus of pain, with index holders experiencing two of their most painful days since 2015.
While a month-end rally helped repair some of the earlier drawdown, the FTSE 100 remains around 5% below where it ended in September.
Royal London Asset Management head of multi-asset Trevor Greetham believes that the low is in, however, and that buyers will end up reaping rewards by grabbing hold of discount opportunities.
Greetham (pictured) draws attention to his firm's proprietary investor sentiment indicator, which is now nearly three standard deviations oversold (see table below).
'The indicator includes measures of stock market volatility, a survey of private investor bullishness and a metric showing the degree to which company directors are buying shares in their own companies,' he said.
'Markets are volatile, investors are bearish and US company directors are very strong buyers of their own stock. To put the current reading into context, this is the 10th most depressed sentiment reading since 1991 (see table below).
'The Trump Slump is right up there with some of the most memorable panics in living memory.'
An air of panic-selling and an apparent dramatic turn in underlying sentiment reads as a strong equity buy signal for Greetham.
'Volatility tends to peak in October, a fact underlined by famous October crashes in 1929, 1987 and 2008,' he explained.
'We expected this October to be choppy... in the equity-unfriendly Stagflation stage of the business cycle and geopolitical risk rising.
'Trade tensions, eurozone stress and Brexit uncertainty make for a toxic mix, and we reduced equity exposure to neutral in the summer.'
This has encouraged the house to move back into a marginal overweight on equities.
'Things are bad, but they aren’t that bad. Global growth has been slowing, but we expect US growth to remain strong well into 2019 on the back of Trump’s tax cuts and spending increases,' Greetham said.
'[Meanwhile] China is responding to market stress by cutting interest rates, expanding bank credit and cutting taxes. We expect the world economy to continue expanding, and we expect stocks to recover from their current negativity as good corporate earnings numbers continue.
'We have been buying stocks on weakness over the last few weeks and now have a moderate overweight position in the multi asset funds we manage.'
He added: 'We are very much aware of the short term risks, but with sentiment so depressed and stock market seasonality about to turn positive, it’s time to say the glass is half full, not half empty.'