Advisor Confidence Index Falls as Year Progresses

Rydex/SGI index in April continued to drop as global outlook dimmed

Although the Rydex/SGI Advisor Confidence Index (ACI) began 2011 at nearly a four-year high, it has steadily eroded since then as conditions in the global economy take their toll. According to results released Wednesday, in April the ACI continued the downward slide it began in February and March, when it fell by more than 5%. Now at 113.54, in April it lost another 0.23%.

While the current economic outlook and the 12-month economic outlook are only down slightly, the most dramatic changes were in the 6-month economic outlook and the stock market outlook. Long term, advisors seem to feel that prospects are mixed, and although the stock market outlook fell again, the drop was not quite as severe as it was in March, when it lost 7.07%.

Rydex/SGI Advisor Confidence Index Results for April:

  • Current economic outlook, -0.23%
  • Six-month economic outlook, +2.72%
  • 12-month economic outlook, -0.28%
  • Stock market outlook, -3.74%

The 12-month outlook stands out, as it is down more than 14% since January.

“We could be setting up for some near-term negative volatility in the equity markets, the European market in particular,” said Gregory Horn of Persimmon Capital Management. “For the long term, however, the trend for equities relative to bonds should remain positive.”

Comments From Advisors Participating in the Rydex/SGI Survey:

Paul Bennett, c5 Wealth Management: “The velocity of monetary expansion to date has already been far too fast to ward off the inevitable outcome: inflation.”

Kenny Landgraf, Kenjol Capital Management: “One would expect interest rates to finally rise, especially in light of higher inflation expectations. Cash is not compelling. Bonds are not compelling. Where do you go with potential higher inflation? The answer is equities and commodities.”

Rob Siegmann, Financial Management Group: “We’re planning to be cautious going into 2012 when many important fiscal policy decisions will be required that can have a dramatic impact on the economy and stock prices.”

Michael Sadoff, Sadoff Investment Management: “The combination of growth, albeit slow, and low interest rates is a powerful combination for the stock market.”

Read about the February results of the Rydex/SGIACIat AdvisorOne.com.

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