Years from now investors will look back with great fondness at 2013, as virtually all the major U.S. stock averages reached new all-time highs, including a 29.6% gain for the S&P 500 Index. This was the largest annual gain since the exuberance of the late 1990’s and the third best performance in the past quarter century. This past year was so rewarding for investors because it contained some major transformative events. Interest rates finally moved higher after persistently declining over the prior 30 years. Gold lost its luster after being considered a crucial safe haven. Most importantly, we saw average investors finally beginning to be comfortable with equity investments as the vivid memories of two horrific crashes in the past twelve years receded. All of these events are producing a major shift in market psychology. Ultimately, changing investor perceptions and expectations heavily influence where the different asset classes are headed next. Given this backdrop, we expect the equity markets to continue advancing in 2014.