Financial advisors ended 2006 with a note of pessimism, according to
the Rydex Advisor Confidence Index (ACI).
Advisors' overall
confidence in the stock market and the economy fell for the second
straight month in December, going from 114.78 to 113.54-a level which
the index describes as slightly more positive than neutral.
The downward trend
was primarily a result of advisors losing confidence in the stock
market, according to Rydex.
"The overall level
of confidence in [the] economy is neutral and some of the advisors
forecast that the economy will slightly expand throughout the first
half of next year," Rydex said in its December index report.
Advisors polled
for the index showed a 4.21% drop in stock market confidence in
December. The six-month outlook on the economy also saw a 1.52% drop in
confidence levels, while there was a slight more optimistic view of the
current economy and the 12-month outlook, which rose 0.13% and 0.43%
respectively.
Advisors who
participated in the index survey conveyed a mix of feelings, with a
slowing economy and a hurting housing market among the main concerns.
"Our concern
remains that a slowing economy will lead to foreign central banks
turning their attention away from the dollar-even triggering selling,
causing the dollar to slip even more," Michael Comando, of Avery
Investment Management, told Rydex. "Add to that falling housing prices
and the risk of recession begins to become an issue."