Advisor confidence rebounded in October after hitting the skids in September, according to the Advisor Confidence Index (ACI), a benchmark that gauges advisors' views on the U.S. economy and stock market. But at the same time advisors aren't exactly bullish, either.

Despite concerns about various economic issues such as inflation, the budget deficit, subprime loans, and trade deficits, the ACI rose 4.87% in October to 105.13, up from the all-time low of 100.25 in September. The ACI is tabulated by Rydex AdvisorBenchmarking, Inc., an affiliate of Rydex Investments.

Yet read the results more closely, and it's clear that many advisors remain very wary. For instance, the majority of financial professionals (68%) feel that the economy is falling into a recession.

"The Fed will likely continue to lower rates as they understand the potential for a deflationary spiral catalyzed by housing, and this may bubble up other asset prices like stocks," said Bill Ramsay, a CFP at Financial Symmetry, Inc. in Raleigh, N.C., who participated in the ACI.  "Stock prices do not look expensive until you understand that profit margins are at historical highs, which has never been fuel for a long healthy bull market, so we are continuing to favor caution much more than over the previous five years."

Another ACI participant added his own bit of caution. "Fiscal irresponsibility of the government and of the consumer will catch up sooner or later," said Rob Siegmann, director of investments at Financial Management Group in Cincinnati. "When this happens and the media runs with it, expect more volatility across all markets."   


If advisors are more confident, they have a funny way of showing it.