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So what might happen with the so called U.S. Fiscal Cliff? What will be the result for the markets?

The gov't pumping more cash into the system is only an addict's short term fix.

The markets are over priced. The U.S. S&P 500 CAPE is about 21 and the average is approx. 16.5 so it is about 29% over priced (present Canadian market is also expensive (I do not have the #'s handy)).

Stocks in general are not cheap.

Obviously math tells us that the U.S. needs to be below the average to even things out to get back to the average. So just how low will the markets, U.S. and CDN. correct??? 50% corrections are not unusual.

Will it be in 2013 or 2014??

IKan
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I am actually pretty bullish on US Equities; you can find many very high quality companies (low debt, stable earnings) with dividend yields above 3% - which compared to bonds (or cash) is pretty good.

I am more pessimistic with Canadian markets however. I think that commodities and financials are over priced (or at least fairly priced) and won't have much upside in the next 12-24 months. I also think the CAD is 15% over valued.

tecmo
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I am actually pretty bullish on US Equities;

tecmo,

Yup, too bad the current political dysfunctional government antics are scaring people into treasuries with virtually zero return or cash with even less return?

Tim
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The dollar is my biggest worry. I own a large % of my equities in US stocks, which I agree have more potential than Canadian equities. Nice yields and more slection in high tech and other sectors. You can only have so much in resource stocks.

It is that dollar thing that worries me. You would think at some point the US dollar will start to fall considering the printing presses are going full out!

Any reason why you think the Can dollar is overvalued? Petro currency?

RMM
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The USD has already fallen, and the "printing press" (which I think you mean quantitative easing; is pretty much priced into the exchange rate. My personal view of the CAD is that commodity prices will fall; this will take 5 cents off the value, also US short term interest rates will rise in the next 24 months which should cut another 0.05 off. All in I think a 0.90 dollar is more likely than anything above par.
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There certainly is a chance the CAN interest rates will go up as well.

I tend to agree the US market should fair ok in the next couple years. If the US dollar moves up that will leverage the returns of US holdings (for Canadians). Might not be so great for gold if the inflation fear doesn't materialize. Short term.

Many moving parts in this game of investing.

RMM
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