In a year in which stocks had already set a very high bar for performance, they certainly did not disappoint in the final quarter of 2013. Since September, the S&P 500 tacked on an additional 10% to close out the year up 32% – the best calendar year gain for the S&P since 1995. The Dow Jones Industrial Average and NASDAQ Composite registered gains of 30% and 38%, respectively.

At Peloton, we have written about stocks “climbing a wall of worry” as a way to explain rising equity markets. In investing, uncertainty creates opportunity. And while human nature makes it difficult to take risk when the environment feels tenuous, history shows that these are often the best investing occasions. Current stocks prices reflect future apprehension. As time passes, and as these apprehensions are resolved or abate, stock prices move higher to reflect the removal of the uncertainty – and thus climb the wall of worry.

This past year was the quintessential example of this phenomenon. If you recall, we began 2013 having just narrowly avoided the Fiscal Cliff. However, concerns immediately shifted to the impacts of the looming Sequester. In June, Fed Chairman Bernanke rocked credit markets by floating the idea that FOMC might “taper” its monthly bond buying before the end of the year. Bond prices fell sharply as the 10-year Treasury bond yield jumped from 1.6% to near 3.0% – a huge move for yields. Stocks sold off on the notion that quantitative easing (QE) was the only thing supporting elevated prices. At the time, we argued that the underlying economy was on solid footing and that company fundamentals supported higher stock prices. Stocks quickly recovered, but they waivered again in October ahead of the looming debt ceiling deadline. This too was addressed, and after a pullback, stocks regained momentum and pushed higher through year-end.

Looking forward, we forecast a relatively benign climate for stocks in 2014: the economy is growing; interest rates are rising but now in an orderly manner; tax changes that were headwinds in 2013 (compared to 2012) will be neutral this year (compared to 2013); corporate profits are growing; and corporate balance sheets are in terrific shape.

2013 was a great year for our clients and for Peloton as a firm. It was marked by a number of changes internally. Brenda Hill, our administrative assistant in Bloomington for over a decade, retired in December. Many Bloomington clients know Brenda and Bob socially, and most of you have had the opportunity to work with Brenda at one time or another on account items. We thank Brenda for her years of commitment to Peloton and to our clients, and we wish Brenda and Bob the very best as they embark on their retirement together. Coincident with Brenda’s retirement, we closed the Bloomington office, and we consolidated our technology and personnel resources in Indianapolis. Ken continues to represent Peloton in Bloomington, and we will certainly travel the short distance from Indianapolis to visit with clients regularly.

Tamre Mullins joined Peloton on January 6th as our new operations manager. Tamre has 10 years of experience in financial services and a clear passion for client service. She brings a wealth of knowledge in marketing and communications also. Please join us in welcoming Tamre. We know you will enjoy working with her as much as we do.