Registered investment advisors began the year with high levels of optimism on the current and future state of the economy and the stock market.
Advisor optimism in the stock market ticked marginally upward to begin the year at a reading of 126, according to the RIA Edge Advisor Sentiment Index (100 reflects a totally neutral view.)
That is the second-highest rating on the stock market since the beginning of 2024, almost matching the level expressed in November.
Almost 7 out of 10 advisors, 71%, consider the state of the stock market to be positive. Only 2% expressed a negative view.
Optimism tempered somewhat when asked their view of the stock market over the next six months: 45% expect an improvement, while 33% expect a decline. That short-term ambivalence reverses when looking out 12 months: 58% expect an improved stock market.
While corporate earnings are expected to exceed expectations in 2025, there is concern over the stock market being overvalued, especially in certain sectors like technology, and the concentration of gains in a few large companies.
Many advisors anticipate short-term volatility, with some predicting a market correction due to high valuations, geopolitical tensions and uncertainty around government policies. However, there is an underlying optimism about long-term market recovery.
Advisor sentiment on the current state of the economy is also elevated at 117, dropping only marginally from December, the index’s 12-month high.
When asked about their feelings for the economy over the next six months, less than half of advisors, 41%, expect improvements, with 28% seeing a decline. That increased pessimism reverses when looking further into the future, with 57% expecting improvement.
Inflation and rising interest rates remain major concerns. Some expect inflation to persist, while others anticipate gradual relief with potential Fed rate cuts. There are also worries about high debt levels and economic slowdowns.
Methodology, data collection and analysis by WealthManagement.com and WMIQ and Informa Engage. Methodology conforms to accepted marketing research methods, practices and procedures. Beginning in January 2024, WealthManagement.com began promoting a brief monthly survey to active users. Data will be collected within the final ten days of each month going forward, with a goal of at least 100 financial advisor respondents per month. Respondents are asked for their view on the economy and the stock markets both currently, in six months and in one year. Responses are weighted and used to create an index tied to a neutral value of 100. Over time, the ASI will provide directional sentiment of retail-facing financial advisors.