But advisors' written comments betray a wariness about economy and markets. Investment-advisor confidence in the U.S. economy and stock market improved for the first time in three months in August, according to Advisorbenchmarking's latest Advisor Confidence Index (ACI).

Peeking through

"We're starting to see some light peaking through the storm clouds," says Bill Ramsay of Raleigh, N.C.-based Financial Symmetry. "Right on cue, oil and commodity prices began falling as inflation-oil headlines and magazine covers peaked."

This "decreased inflation pressure is a gift to [Federal Reserve chairman Ben] Bernanke, while the recently passed mortgage legislation appears to have enough meat to slow or stop a self reinforcing downward spiral in housing, though it will still likely take a couple of years to work off the excess inventory," adds Ramsay.

The ACI rose nearly 13% to 97.06 in August from 86.27 in July. July's ACI |image1|result was an all-time low for the four-and-a-half year old sentiment gauge.

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.

All four of the ACI's components increased in August.

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Consumer confidence in the U.S. economy also improved this month. The Conference Board's Consumer Confidence Index |image3|(CCI) rose to 56.9 (1985=100) from 51.9 in July. Aside from a marginal gain posted in July, the CCI had been losing ground since last December.

Still chilly

Despite the ACI's rise this month, advisors aren't noticeably upbeat in the written-comment portion of the latest ACI survey.

"We are in the middle of a global economic melt-down," writes Peter Wheeler of San Diego-based Wheeler/Frost Associates. "The credit crunch will continue to hold back the housing recovery, increase unemployment and extend the recession."

According to Kenneth Graves of Atlanta-based Capital Research Advisors, the Fed and Congress may have taken measures " to address the mortgage malaise," there's more trouble around the corner in the form of a commercial-lending crisis.

"That shoe has yet to drop and it is not an 8D in size; more like a 13EEE -- and if it falls, a lot more falls with it," says Graves.

Paul Bennett of c5 Wealth Management -- another Atlanta-based RIA -- sees "credit-card companies, second mortgage and [home equity line of credit] issuers" as "the next to fall." As a result, he says, "asset allocation and downside protection in portfolios is paramount at this juncture."

Advisorbenchmarking is an affiliate of Rydex Investments.-FWR

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