I think these are the moments that make investing the challenge it is.  It seems that there is no right move.  It is EXTREMELY difficult to try to time the market on a short term basis.  Companies are in business to make money and continually grow their ability to do so.  But, this ability only exists in the context of economic growth as a whole, intra-national for most companies and international for many others.

The fiscal cliff discussions are a smoke screen in my view.  Bottom line is that we cannot afford the growth in government spending.  Taxes cannot hope to cover it as it is growing far in excess of economic growth.  We will have some sort of "cliff" in the current nomenclature whether it be in the size currently set up or smaller, or eventually, even larger!

And so it falls to us to try to figure out what stocks are discounting.  There will be volatility is the only sure thing.  As in the past, I think an investor needs to try to not listen to much to the chatter and try to understand what the goal is.  When you buy a stock it is economically the same as going into the business personally- with far more flexibility in getting out!  So right now, what business do you want to be in?

Retail, with consumers trying to climb out from their hole of personal debt?  I like this at least in terms of basic stuff which we all need or are inexpensive luxuries, MCD, PG, KO, CLX and KMB are in this group as are many other good companies.

Energy?  I think this has a huge role in future economic development and owning good companies that take leadership positions is critical XOM for instance

Telecom?  VZ and T own the majority of the bandwidth in a world where everything is going wireless.

Pharma?  MRK and JNJ, great companies and we as a species seem to be intent on trying to live forever and our parts break down ;)

Tech?  I am not a big tech guy as I continually get disappointed when tech doesn't work rather than marvelling at the things that do work.  So I am not much help in this arena.  I worry about AAPL (the only one I own) as I find it personally to be resting on its laurels and not delivering quite as high a quality as it used to.

These are all developed companies.  There are many great startups with new ideas, as well.  Remember, we are not far from sharks when it comes to economic activity.  We need to keep swimming (I know some stop for the evenings, but everything needs R&R).  

I do think that eventually we will realize we can't afford the growth in government spending.  That will be a great development and it should happen over time.

In the mean time, stocks will be ok, especially when they pay their shareholders with dividends.  Buy them on dips. Bonds will be ok too as growth will be muted by the inevitable contraction from the fiscal side.  Make sure they have a place in your portfolio.  In a few years we may have to start thinking about inflation, but not yet.