RIAs' view on the stock market sours as hope for a V-shaped recovery fades. After a three-month climb, RIA confidence in the in the U.S. economy and stock market fell back again in February, as the view that stock prices had been so beaten down in recent months as to present compelling (if selective) buying opportunities took a backseat to a sense that business and market conditions were still worsening.

"Recovery will not start until confidence in the government and in financial institutions is restored," says Peter Wheeler of San Diego-based Wheeler/Frost Associates. "This will likely be in 2010 for the stock markets, in 2011 for the economy and in 2012 for real estate."

Advisorbenchmarking's |image1|Advisor Confidence Index (ACI) fell 2% to 82.80 in February from 84.76 in January.

Based on a monthly survey of independent investment advisors, the ACI goes from a "very negative" 33.33 to a "very positive" 166.67. Its mid point, 100, represents a neutral outlook on the stock market and the economy. The index reached an all-time high of 121.41 in December 2005. It hit an all-time low of 79.07 in October 2008.

After several months in which stock-market outlook was the strongest component of the ACI -- underpinned by the view that stock prices |image2|were, by and large, at bargain-bin levels -- advisors' view of the market was the weakest component of the February ACI.

Meanwhile, the Conference Board's Consumer Confidence Index (CCI), took another nosedive, dropping to 25.0 in February (1985=100) from 37.4 in January.

"Not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over |image3| the next six months, "says Lynn Franco, director of the Conference Board's Consumer Research Center.

Traction somewhere

Like Wheeler, many independent investment advisors thought a quick recovery from the economic and market downturn, then in its fourteenth month, unlikely.

"I think the market has seen the worst but I don't expect to see a V-shaped
Bottom," says David Cramer of Owings Mills, Md.-based Cramer Financial Services. "In this economy I think it will be a U-shaped recovery with an extended base.

James Dailey of Harrisburg, Pa.-based TEAM Financial Managers says "the stock market has been struggling to form a base which could lay the foundation for a renewed -- but likely temporary -- recovery from the fall 2008 crash. "

But Kenny Landgraf of Austin, Texas-based Kenjol Capital Management thinks the U.S. government's commitment of nearly $8.7 trillion "committed to fight this global economic meltdown, combined with a massive expansion of the money supply," makes it "hard to imagine that we won't get traction somewhere." Still, he adds, "The question is when."

Advisorbenchmarking is a subsidiary of Rydex Investments. -FWR

Purchase reproduction rights to this article.