Press Release:
Press Release
News Article March 2005
ROCKVILLE, Md., Feb. 28 /PRNewswire/ -- Advisor confidence slid for the third month in a row in February, according to Rydex AdvisorBenchmarking, Inc., an affiliate of Rydex Investments, which released the February results for the Advisor Confidence Index (ACI) -- a benchmark that gauges advisors' views on the U.S. economy and markets.
Advisors are still skeptical
Advisor confidence levels decreased 2.38% last month from 120.95 to 118.08. While the economy continues to make slow, steady progress, advisors' big concern is the U.S. balance of payments and its impact on the dollar.
All four components of the ACI slid from last month's numbers, with advisors' 12-month economic outlook and their stock market outlook showing the least enthusiasm. Here's a closer look at the components:
Changes in the Components of the Rydex
Advisor Confidence Index Since January
Current economic outlook -2.10 %
Six-month economic outlook -1.46 %
12-month economic outlook -2.38 %
Stock market outlook -3.64 %
Advisor vs. consumer confidence
Of note, the Conference Board's Consumer Confidence Index, which had improved in December, also edged up in January. The index now stands at 103.4, up 1.08% compared to a 0.72% decline for the advisor index.
Notable comments from participating advisors
Most of the advisors who participate in the index have elected to have their names made available to reporters who would like to interview them about their economic sentiments. AdvisorBenchmarking can facilitate such interviews for reporters.
"Earnings appear to be trending slightly lower and the market is priced for near perfection. With bond rates still low, however, flows may still head into equities. A big concern is our balance of payment and its impact on the dollar. This uncertainty makes it difficult to commit to non-U.S. equities for domestic investors. On the back of all this, the current administration seems willing to make tough budget decisions. This should take some pressure off the Fed to raise rates too quickly."
-- Gregory Horn, Persimmon Capital Management, LP
"The flattening of the yield curve has caused me to back off of my previous optimism. A flat to inverted yield curve is not a positive indicator for the stock market."
-- David Cramer, Cramer Financial Services
"Energy has been all the rage over the past 12 months. Having been early to the game and going heavily overweight in April 2003, we are getting uncomfortable with the crowd around us. The current rally in the dollar is likely to continue for a couple more months, which could set the stage for a decent-sized correction in the energy sector. Seasonal weakness is also common during the spring, so a more defensive posture for exposure to this area is prudent."
-- James Dailey, TEAM Financial Managers
"The numbers show that the U.S. economy is moving along slowly -- expect slow steady growth in the near future."
-- Jim Elder, ElderAdo Financial
"We still have a positive outlook for the stock market, as the underlying strength is impressive. There is a lot of cash in money markets and on corporate balance sheets for potential buying momentum. Finally, earnings are strong and, while potentially close to a cyclical peak, there seems to still be some room for positive surprises. On the negative side, the Federal Reserve seems to have an unspoken target for Fed funds, which the longer end of the bond market seems to think is high enough to restrain growth or possibly push us into a recession."
-- Bill Ramsay, Financial Symmetry, Inc.
"The economy continues to make slow, steady progress, weaker oil and the stronger dollar are helping, and corporate earnings are expected to continue to grow, but at a more sustainable pace. Like the proverbial race between the tortoise and hare, this slow and steady progress provides a sound foundation for the markets to grow and deliver reasonable returns. In this environment, our analysis continues to favor value names over growth."
-- Keith Newcomb, Full Life Financial, LLC
"The majority is looking for continued economic strength and a generally strong stock market. We learned a long time ago that this is the time you ask "what could go wrong?" The answer: a lot. Making money this year and for some time beyond will be a grinding process, not a smooth one. It will take flexibility and resourcefulness on the part of advisors. There are excellent solutions but they are not in obvious places. The process of uncovering them is continuous effort. The resourceful will survive best."
-- Robert Isbitts, Emerald Asset Advisors
"With the successful completion of the election in Iraq coupled with renewed peace efforts between Israel and the Palestinians, global strife is reduced, allowing U.S. business and consumers a chance to focus on expanding their purchases and growing the domestic economy. Profits should rise in the U.S., which could lead a more global advance. Nothing dramatic, but slow and sustained growth will propel the equity markets higher through the summer."
-- Terry Siman, Executive Financial Services Inc. About Advisor Confidence Index's Methodology
The Advisor Confidence Index is a benchmark that gauges advisors' views on the economy. Modeled after the Consumer Confidence Index, it captures the sentiments of 150 independent registered investment advisors (RIAs). The participating advisors answer four multiple-choice questions every month reflecting their views on the economy. Three questions gauge their views on the economy for the current time period, the subsequent six-month period and the subsequent 12-month period. The fourth question gauges their outlook on the stock market for the subsequent six months. For each question, five multiple-choice answers are offered, ranging from "very positive" to "very negative," each carrying a specific weighting. For each question, the mean is calculated. Those four means are then aggregated, and the resulting mean is calculated. Using a deduced factor, the new mean is converted to a base where a "neutral" stance is equal to 100. A "very negative" stance is 33.33; a "negative" stance is 66.67; a "positive" stance is 133.33; and a "very positive" stance is 166.67. Every month, the change in the index's value from the preceding month is also calculated and reported as a percent change.
About Rydex AdvisorBenchmarking Inc., an Affiliate of Rydex Investments
Rydex AdvisorBenchmarking is a research and analysis center focused on the RIA marketplace. Every year through its survey web site, the firm conducts multiple surveys on advisors, covering a host of business management and investment-management practices. The findings and analysis of the data are then released to the marketplace as annual studies, quarterly research notes and monthly newsletters. The service is aimed at helping advisors grow and enhance their firms by comparing how their businesses fare against other advisors. Advisors also learn best practices of the most successful advisors in the business. AdvisorBenchmarking is an affiliate of Rydex Investments.
The analysis on Rydex AdvisorBenchmarking.com is based on the number of completed surveys and reflects only information from those surveys. This information is intended to be general, and these overviews are no substitute for professional, legal or consulting advice. This information should not be construed as advice from Rydex Investments or any of its affiliates.
Source: Rydex Investments
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