Advisor confidence bounced back in June, according to Rydex
AdvisorBenchmarking, Inc., an affiliate of Rydex Investments. The
Advisor Confidence Index (ACI) is a benchmark that gauges advisors'
views on the U.S. economy and stock market. Since its inception three
years ago, the ACI has been a useful tool for advisors to assess how
their market outlooks align with their peers.
Comparing the ACI
to stock market movements reveals that advisors correctly predict
future market movement trends about 80% of the time. The six-month outlook shares the same
pattern as the S&P 500 Index, revealing that advisors' financial
outlooks were correct most of the time when looking ahead at how the
stock market might perform over the next six-month interval.
Overall, the ACI
has dropped 8% to 113.42 since the index was first created in April
2004. During the last three years, advisors have consistently been
pessimistic about the six-month outlook for the economy. In fact, the
six-month economic outlook sentiment has dropped 12% since April 2004.
But the ACI
increased 1.68% in June to 113.42, up from 111.55 in May, as advisors have
a positive assessment of future trends in the economy. "Strong
corporate earnings, good productivity and reasonable valuations will
propel the market higher," commented one survey participant. Also,
advisors think the U.S. economy continues to grow based on continued
cost cutting and labor savings due to such factors as offshoring,
outsourcing and advancements in technology.
Three out of the
four elements used to calculate the ACI increased in June. Advisors
were most positive about the six-month economic outlook, which was up
5.9%. The 12-month economic outlook improved 3% and the current take on
the economy rose 1.3%. The lone downer was the stock market outlook,
which fell 3.5%.