Blogs > Your Money

Dave Patterson and Erin Preston, a father-daughter team of Certified Financial Planner® licensees, provide thoughts and suggestions on a broad collection of personal finance topics.  Information provided in this BLOG is intended to be of a general nature and may not be appropriate for all situations.  Readers should consult with their own financial advisors before relying on any information contained herein.

Wednesday, March 9, 2011

Half Full or Half Empty?

We are basically optimistic people and tend to focus on the positive rather than the negative. We’ve had an “insider” (aka family member) mention that the blogs of late have had a pretty consistent cautionary tone. That’s due in part to our desire to help our readers address the issues that make them vulnerable when economic downturns occur.

Today, we’d like to report on some positive signs that things are getting better. A study by Charles Schwab and Company titled “Independent Advisor Outlook Study”, conducted between January 18th and January 28th, 2011shows that independent registered investment advisors (RIAs) are now quite optimistic about the economy. Schwab conducts its study every six months and the recent study shows a marked improvement in RIA optimism.

The survey included some 1300 RIAs with over $284 billion under management. The report stated that more than three-quarters of the RIAs surveyed (77 percent) expect the S&P 500 to rise in the next six months compared to 63 percent in the July 2010 study. According to the study, more than 50 percent classified themselves as “bulls” and less than 10 percent as “bears”.

Below are some of the findings included in the study:

• U.S. Treasury yields: Sixty-four percent think U.S. Treasury yields will increase in the next six months, while only eight percent think they will go down.

• Bush tax cuts: An overwhelming majority (85%) believe the extension of the Bush tax cuts will have a favorable impact on the stock market and economy overall.

• Quantitative easing: Fifty-five percent say the quantitative easing activities being conducted by the Federal Reserve will have a favorable impact on the stock market and economy overall.

• Inflation: Sixty-four percent of advisors think inflation will increase over the next six months, up significantly from just 28 percent six months ago.

• Cost basis reporting changes: Nearly half of RIAs’ clients (48%) are unaware of the impact the recent changes to cost basis reporting will have on their tax situation.

We hope the study portends a continued improvement in the economy. We live in turbulent times, which sometimes makes it difficult to see the glass as half full versus half-empty.


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