Advisors ask whether the equity market's recent run is running out of steam. RIA confidence in the U.S. economy and stock market fell back in May, according
to the latest Advisor Confidence Index (ACI). Excessive exuberance on the part
of investors, a sense that the U.S. consumer is under pressure from rising
energy prices and the possibility of slowing corporate earnings growth are some
of the factors investment advisors site.

"The financial markets are getting more risky as spreads between safe and
risky assets continue to narrow," says Bill Ramsay of Raleigh, N.C.-based
Financial
Symmetry. "Apparently too many investors
believe that high risk equals high return."

Advisorbenchmarking's ACI, which is based on a
monthly survey of 150 independent RIAs, fell 3.93% in May to 111.55 from 116.11
in April.

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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 ACI has been in existence since April 2004. It hit an all-time high
of 121.41 in December 2005 and an all-time low of 106.07 in June 2006.

Each of the ACI's four components fell back in May. Advisors' current
assessment of the U.S. economy declined by 3.96%; their view of the economy six
months out fell by 5.03%, and their assessment of the economy a year ahead
slipped by 0.44%. RIAs' consensus view on the stock market's performance six
months out declined by 6.14%.

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The Conference
Board's Consumer Confidence Index
retreated to 104.0 in April from 108.2 in March.

When, not if 

Advisors' comments varied widely in April. In May there is a more prevalent
sense that the stock market is in for a decline -- though there's disagreement
about the size of the correction.

"As we enter the middle of the year, I expect a slowdown in stock market
activity," says Noel Swain of Spartanburg, S.C.-based ProVest Wealth
Advisors. "I expect it to pick back up in
late September or early October and finish well."

Terrence Beaton of Beaton Management Company in Haverhill,
Mass., agrees that the stock market -- which he says is being buoyed by
private-equity buying and "increasing earnings from weakness in the greenback"
-- is due for a correction. "But investors don't want to sell as long as the
market continues to go up."

Robert Isbitts of Weston, Fla.-based Emerald Asset Advisors
says that many stocks are rising in price because they're viewed as takeover
targets. "That's not investing, it's gambling," he adds. "The other gamble is
the one market participants are taking on the US consumer. Energy, food, housing
-- all are segments of the economy that are putting all but the wealthiest
consumers in a disadvantaged position." If combined with tighter monetary policy
"layers of consumer debt [will] gradually unravel, and stock prices will fall
hard."

But Pat Raskob of Tucson, Ariz.-based Raskob Kambourian
Financial says that "clients are feeling
comfortable that things are going well, with inflation somewhat under control --
except for gas prices -- and [they're] busy planning vacations and trips for the
summer." Spending, he concludes, "will more than likely be good for at least the
next quarter."

Advisorbenchmarking is an affiliate of Rydex
Investments. -FWR

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