November 2, 2011

Advisors Regain Cheer Amid Gloom

October sees biggest confidence reversal; September figures had 'excess pessimism'

After a particularly glum confidence index in September, advisors have apparently recovered their mojo in, of all times, a month that saw Greece nearly default (again) on its debt and UBS uncover a huge loss from unauthorized trades.

Citing recognition of the market’s overall bearishness, advisors perked up at the notion that malaise in general had gotten them down in September. In the words of Curt Weil, a partner at Weil Capital Management, “Excess pessimism, a gold bubble—what's not to like?”

According to the Advisor Confidence Index (ACI) from Rydex SGI AdvisorBenchmarking, overall confidence increased by 8.70% in October, with the index up 7.97 points to 99.64 from its close in September at 91.67. All four elements of advisor confidence that make up the ACI rose for the month, however illogically. The biggest gainer was the 12-month outlook, up a whopping 13.91% from September—when it lost a substantial 8.45%.

The six-month economic outlook registered an increase of 10.76%; the current economic outlook rose by 7.46%; and even—or perhaps especially—the stock market outlook was up by 2.97%. Rob Siegmann of Financial Management Group said in a statement, “We expect the market's volatility to continue for 12 months at least, but this provides longer-term investors an excellent rebalancing opportunity.”

He continued, “There are numerous issues that continue to loom over the economy and the market. We feel these issues will be resolved with a compromise, but will not happen as quickly as the fickle market would like.”

It is only the third time this year that the ACI rose; it is down almost 18% from its high in January. November is bound to be interesting.

To read more about September's ACI, go to AdvisorOne.com.

Reprints Discuss this story
This is where the comments go.