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(© Brendan McDermid / Reuters)
(© Brendan McDermid / Reuters)

Earlier Discussion

What Jim O'Shaughnessy expects in 2012 Add to ...

The developed nations of the world have a lot of develeraging to do, what do you think the implications are on economic growth? Do you see strong fundamentals in the North America overriding this develaraging effect in terms of growth?

[Comment From Jim O'Shaughnessy]

Well, I think you need to split the question into two parts--Government and corporations. Right now, Governments are in need of cost-cutting and rationalization of taxes...

[Comment From Jim O'Shaughnessy]

Whereas in many instances, corporate balance sheets have never been stronger. So I think that companies are actually in a much better place going forward than Governments.

[Comment From Ryan Anderson in Winnipeg ]

Over the next 3 or 4 years do you expect the high level of volatility we have seen in the markets to continue?

[Comment From Jim O'Shaughnessy]

We think that while markets will remain volatile over the shorter term, things will calm down over the next 3 to 5 years and we will see a return to more normal conditions.

[Comment From Dennis ]

I am currently still sitting in a lot of cash and fixed income holdings. Is right now a good period to start going back into equities even with problems in the EU and employment and debt problems in the US. Or should I hold off until either region stabilizes a little more?

[Comment From Jim O'Shaughnessy]

It very much depends upon your personal circumstances. If you are young, I would recommend that you move a significant portion of your assets to stocks but if you are older, I would suggest investing the cash in stocks with high dividend yields. I would also seriously consider...

[Comment From Jim O'Shaughnessy]

thinking about moving your fixed income to shorter duration bonds, as inflation is very likely under all of the quantitative easing.

[Comment From Nick, Barrie ON ]

Hey Jim, using quantitative research everyday do you find there is a positive correlation between Inflation and stock returns?

10:41 [Comment From Jim O'Shaughnessy]

We did a study of inflation and found that while it kills bond returns, it is far better with stocks, particularly those with strong price momentum. You can see the whole study at our website at www.osam.com

[Comment From Wilf ]

With the expectation of a positive period for 2012, would you anticipate small caps to lead the charge?

[Comment From Jim O'Shaughnessy]

Small stocks have had a hard time in general gaining traction during the European debt crisis and yet historically they have outperformed large. Generally, buying into weakness of an asset class that has good long term results can provide good returns.

Darcy Keith - Up next, we got two questions, from Fernando and Brian, on the always popular topic of gold

[Comment From Brian ]

Hi Jim, do you see physical gold appreciating further with all this quantitative easing expected?

[Comment From Fernando ]

At current prices is gold still a good investment? If affirmative, would you invest in ETFs, producers shares or physical gold?

[Comment From Jim O'Shaughnessy]

Gold has been acting strange recently. There was a pretty big sell off in September and it has been inching back up recently, but I wonder if a lot of the buying in gold has already been done. In general, with QE, gold and other hard assets should do well.

[Comment From Jim O'Shaughnessy]

We own gold in a Tactical Asset Allocation portfolio we are developing and we use the GLD ETF.

Darcy Keith - Next up is Craig, with a question about your outlook for the loonie.

[Comment From Craig ]

Will the us dollar be stronger than the Canadian dollar

[Comment From Jim O'Shaughnessy]

The U.S. dollar may become popular if the Euro deals fall apart. That would see a lot of money flow into US T-bills and bonds, which could firm up the US dollar.

Darcy Keith - Speaking of the euro....

[Comment From Jerry ]

Can the Euro be saved ? , if not what is in store for Canada?

[Comment From Jim O'Shaughnessy]

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