But that's coming off historic lows for the Advisor Confidence Index. Corporate earnings growth and lower energy costs contributed to moderately improved outlook helped AdvisorBenchmarking’s Advisor Confidence Index (ACI) edge off October’s all-time lows to post a slight gain in November.

“As corporate earnings continue to accumulate without the corresponding increase in share prices, stocks are becoming cheaper,” says Mickey Cargile of Midland, Texas-based WNB Private Client Services. And though this may mean that the economy is holding up fairly well, Cargile sees middling investment returns in the short run.

RIA confidence, as gleaned from AdvisorBenchmarking’s monthly survey of 150 independent advisors, increased about 1.6% to an ACI reading of 109.96 in November, up from 108.22 (revised) in October – the lowest result since the index debuted in April 2004. Modeled after the Conference Board’s Consumer Confidence Index, the Advisor Confidence Index gauges independent RIAs’ views on the economy and the stock market.

Bernanke watch

The index scale goes from a “very negative” 33.33 to a “very positive” 166.67; the mid point, 100, represents a neutral outlook on the stock market and the economy.

Meanwhile the Consumer Confidence Index shot up 16% in November to an index level of 98.9. The consumer index gave up around 3% in October after a 17% drop in September.

Three of the ACI’s four components rose in November. RIAs’ assessment of contemporary economic conditions increased 7.86%. Confidence in the economy six months out grew 3.90%. Confidence in the stock market – also viewed six months out – rose a modest 0.45%. The weakest element – which was the strongest component last month – was advisors’ view of the economy a year from now, which declined by 5.89%.

Some of those who took part in the survey were encouraged by friendlier fuel prices in the wake of an unusually mild autumn, especially in the Northeast. "Lower energy prices will allow consumers to help keep the economy healthy over the next few months," says Terrence Beaton, of Haverhill, Mass.-based Beaton Management Company.

But James Dailey of Harrisburg, Pa.-based TEAM Financial Managers – who last month spoke of the market’s transition to a cyclical bear stance – warns that Ben Bernanke's nomination to the chairmanship of the Federal Reserve System, though hailed by many investors, could bode ill for the economy. “Bernanke has the reputation of being a Keynesian and easy money advocate, which may be why the bond market greeted his nomination with a sell off,” says Dailey. “We believe it is a very dangerous selection.”

AdvisorBenchmarking, compilier of the ACI, is a research affiliate of Rydex Investments. –FWR

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