But there’s growing dissatisfaction with traditional approaches to investing. Registered investment advisors (RIAs) felt more bullish about markets and the economy in May than in April. The Rydex AdvisorBenchmarking Index recorded its biggest jump last month since November 2004. That said, May’s result comes off April’s drop to new lows on the 14-month-old index. And though worries about the high energy costs seem to have abetted – only 17% of RIAs think oil prices will rise in the next three months – advisors still fretted about the national debt, the federal government’s spending deficit, inflation and wobbly corporate credit.

Advisors’ confidence level, as measured by the Rydex survey of 150 independent RIAs, rose 2.7% on the index to 114.2 in May from 111.12 in April – which saw a 7.3% drop from 119.9 in March. The index scale goes from a “very negative” 33.33 to a “very positive” 166.67; the mid point – 100 – represents a neutral outlook on markets and the economy.

The Conference Board’s Consumer Confidence Index – based on a representative sample of 5,000 U.S. households – also rebounded in May, rising 4.8% to 102.2 from 97.5 in April, when consumer confidence fell 5.3% from 103 in March.

Out with the old

Rob Siegmann of the Financial Management Group in Blue Ash, Ohio, has a glass-half-full view of economic and financial conditions now in play. “The economy looks good, and it ultimately drives the market,” he says. “Factors such as the price of oil and the federal spending deficit will create volatility and rebalancing opportunities.”

But James Dailey of Harrisburg, Pa.-based TEAM Financial Managers takes a more cautionary line. “The current economic and market environments have proven to be very dangerous in the past,” he says. “There are tremors in the credit markets – auto debt and convertible bond markets – and the migration to risk aversion is firmly in place. Capital preservation is critical."

Robert Isbitts of Emerald Asset Advisors in Weston, Fla., seems to agree with Dailey. He notes as an indication of the “type of environment we are in” that the S&P 500 added just 5% in the seven years through mid May this year. “[This is an environment] that requires out-of-the-box thinking to grow and preserve wealth,” he says. “It's time to make room for investments and investment managers who pursue growth with lower correlation to the stock market and interest rates.” –FWR