From the October 2006 issue of Boomer Market Advisor • Subscribe!

Advisor confidence sinks in August

Despite Anderson's optimistic outlook, Rydex Investments' Advisor Confidence Index declined in August following improvements in July. The overall benchmark weakened to 106.17, down from 110.27 the previous month, with the advisors' assessment of the economy decreasing the most, down 7.14 percent.

The loss in confidence was attributed to heightened concerns about rising inflation, skyrocketing fuel prices, real estate bubbles and the war in Iraq.

"It appears that the U.S. consumer is finally running out of steam based on preliminary retail figures," says Gregory Horn of Persimmon Capital Management, one of the surveys participants. "The housing market looks like it is on track for a soft landing, and the Fed may be able to pause its never-ending credit tightening if inflation numbers follow the latest GDP report for the second quarter. Bonds may finally hold on to their coupon for the foreseeable future. Stocks should increase at their earnings growth rate at current P/E levels if interest rates hold steady. The wildcard is global instability, which could change the entire landscape for investors, as a further flight to safety is not to be ruled out."

A closer look at the Index's components reveals the following:

  • Current economic outlook is -7.14 percent
  • Six-month economic outlook is -2.93 percent
  • 12-month economic outlook is -1.77 percent
  • Stock market outlook is -2.69 percent
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