After a strong start for the stock market in January, financial advisors have turned more optimistic about the market’s performance for 2012, according to a recent SEI Quick Poll.
Nearly all advisors surveyed (90 percent) in early February said they expect a positive return of the S&P 500 for 2012. This is an 18 percent increase compared to a similar survey conducted in mid-January. Even more dramatic was a 50 percent increase among those who predicted gains higher than five percent. The February survey was completed by more than 100 advisors, most of whom manage more than $50 million in assets.
“Investors and advisors alike have been waiting for an excuse to become more positive,” said Steve Onofrio, managing director, SEI Advisor Network. “Whether it’s the trend in unemployment numbers, positive corporate profits, or lack of bad news, the investing sentiment has shifted to a more optimistic attitude. While we aren’t out of the woods yet, it’s important for advisors and investors to recognize we are in the early stages of a changeover and position their portfolios accordingly. With that said, there are still global risks including Greece, Syria, Iran, and Europe, that could tilt sentiment negative again.”
More than one-quarter of the advisors surveyed also predicted that the “Pessimism Bubble? hovering over the economy will burst this year. Additionally, nearly one-third said that investor sentiment can best be described as “the tide is turning.” Lastly, a majority of advisors said that the investing adages, “Bull markets climb walls of worry,” and “A rising tide lifts all boats,” are the two most accurate sentences for today.
“Unfortunately, investors have become so used to the volatility that they now view any change, positive or negative, as a blip on the radar rather than a true directional movement. Yet, clearly, advisors are more confident in the markets,” said John A. Scott, CEO of Cedrus in Golden, Colorado. “Advisors have a responsibility to educate and keep their clients informed on happenings in the markets to make sure they understand the true fundamental drivers of performance. I view this as an ideal opportunity for advisors to capitalize on the many investors who are disappointed with their past performance and are looking for a new advisor to better position them to attain their varied goals in any market condition.”
To learn more about the SEI Advisor Network, visit www.seic.com/advisors.
By Ayo Mseka