LPL Financial Announces First Full-Year Performance Results of Current Conditions Index

BOSTON, April 26 /PRNewswire/ -- LPL Financial Corporation ("LPL Financial"), the nation's largest independent broker-dealer*, today provided the first one-year update on the performance of its Current Conditions Index (CCI), a tool designed to provide retail investors and their financial advisors with real-time decision-making insight into the true underlying health of the economy and financial markets each week.  The CCI tracks how closely the economy is aligning to Strong Growth, Growth, Slow Growth, Contraction and Crisis scenarios.

(Photo: http://www.newscom.com/cgi-bin/prnh/20100426/NY92244 )

Created by the Research group of LPL Financial, the CCI excludes the thousands of indicators that lag or lead the economy. Instead, this user-friendly weekly tracking tool includes just ten key indicators, constantly revisited and updated, that together provide a snapshot of where the economy is at any given moment.

Jeffrey Kleintop, executive vice president and Chief Market Strategist for LPL Financial, said, "We are delighted that the CCI continues to meet its original goal:  Serving as a real-time and practically applicable tool that describes the conditions most relevant to investment decision-making at any given moment.  Too many retail investors and their financial advisors are overly focused on lagging indicators, all of which are too infrequent and volatile to provide actionable insight that delivers results.  By this same token, ardent stock market watchers are over-emphasizing something too heavily fueled by the often over-reactive emotions of its participants, as demonstrated by the first quarter 2009 investor panic that temporarily brought the major market indices to historic lows.  Thanks to the CCI, we decided to begin to add risk to our recommended portfolios near the end of the first quarter of 2009, as the markets bottomed and conditions began to improve."

Since April 2009, the Index has swung from Contraction to Strong Growth.  After rebounding from the 2009 low point in early March, the CCI advanced steadily until early August.  The CCI renewed the upward move with the biggest increase between end of October 2009 and April 2010, jumping from 81 to 231.  Reflecting the accuracy of the CCI at tracking the conditions most relevant to investors, the Index has directly and closely correlated with the ultimate performance of the S&P 500 Index during this time period, following the heavily emotion-driven reactions of the S&P 500 in the first quarter of last year.

"Investors too easily lose themselves in the overgrown thicket of market and economic statistics out there in the public domain.  The CCI helps individual investors and their financial advisors set aside the excess complexities and heavy emotionalism that can hijack the investing process, and concentrate only on the most important underlying rhythms of the marketplace.  Oscar Wilde once wrote deprecatingly of those who 'know the price of everything, and the value of nothing.'  Those who fail to focus on the most relevant metrics of assessing economic and market health risk being ignorant of both," Mr. Kleintop said.

The CCI today encompasses the following indicators:

• Initial Claims Filed For Unemployment Benefits
• Fed Spread
• Credit Spreads
• Retail Sales
• Shipping Traffic
• Business Lending
• VIX
• Money Market Asset Growth
• Commodity Prices
• Mortgage Applications

Mr. Kleintop concluded, "The cautious optimism we espoused this time last year as we began to abandon our defensive stance and take on more risk has been amply rewarded in the twelve months since.  Looking ahead, we believe that the CCI may slow from a 'Growth' to a 'Slow Growth' scenario in the economy by the latter half of this year as the Fed Spread widens and the policy-driven tailwinds supporting economic activity fade.  While the CCI's indicators continue to rule out the more pessimistic scenarios that remain in circulation among a number of market watchers, we believe there is now cause for a slightly heightened degree of selectivity and caution in portfolios as we approach the second half of 2010."

About LPL Financial:

LPL Financial is one of the nation's leading financial services companies and largest independent broker-dealer (based on total revenues as reported in Financial Planning magazine, June 1996-2009).  With offices in Boston, Charlotte, and San Diego, LPL Financial and its affiliates offer industry-leading enabling technology, comprehensive clearing and compliance services, practice management programs and training and independent research to 11,950 financial advisors, more than 750 financial institutions, and approximately 4,000 institutional clearing and technology subscribers.  LPL Financial has $279.4 billion in advisory and brokerage assets as of December 31, 2009.

LPL Financial and its 2,400 employees serve financial advisors through Independent Advisor Services, supporting financial advisors at all career stages; Institution Services, focusing on the needs of advisors and program managers in banks and credit unions; and Custom Clearing Services, working with broker-dealers at leading financial services companies.

* Based on total revenues, Financial Planning magazine, June 1996-2009

Member FINRA/SIPC

SOURCE LPL Financial Corporation