RIAs optimistic about the economy, stock market

Registered investment advisors across the country are more confident in the economy and the stock market than they were in April 2012.

Penton’s WealthManagement.com Advisor Confidence Index rose by 8.4 percent in February 2013 to end at 109.7.

The Index is a monthly benchmark with an eight-year history that gauges registered investment advisor views on the U.S. economy and stock market. More than 300 advisors are surveyed for the Index each month. They are asked for their views on the outlook for the economy now, in six months, in a year and on the stock market.

February was the third month in a row that the index climbed higher since suffering an 11 percent decline in November, reflecting uncertainty around the election and the resolution of the fiscal cliff. Since then, markets have climbed 10 percent and advisor confidence rebounded.

"Clearly, the U.S. economy is mending," ACI panelist William Green of GL Capital Partners says . "Home sales, employment and confidence all look stronger. Expect a few bumps or flare ups along the way, but the U.S. economy is forming a positive base. My outlook for 2013 and 2014 remains quite positive."

Current economic outlook rose 5.2 percent; the six-month economic outlook rose 7 percent; the 12-month economic outlook rose 18 percent and the stock market outlook rose 4.3 percent.

Survey participants are clearly optimistic about the near-term future of the economy, but many think the recent market boom is being fueled more by federal stimulus spending than economic fundamentals. And while the near term may look positive, dangers lurk further out.

"As long as the Fed is artificially suppressing interest rates and treasury rates have seemed to hit bottom, money will flow to equities as it searches for yield," says ACI panelist Rick Horton of WealthPlan Advisors. "Once governments start down the road of printing money, they are like an addict and have a hard time giving it up. When the Fed announces that they no longer will suppress rates, then we should see a bubble of some sort in both the bond and equity markets. Probably won't happen for 24 to 36 months."

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