Based on all the negative talk about the “fiscal cliff” and a resurgence of European debt problems, you would think stocks are heading for an immense drop by the end of the year. But we likely won’t go over the cliff.

Stocks, in their wisdom, usually forecast the future six months or more in advance. However, the U.S. Federal Reserve last week made a new rate pledge and vowed that it would pump more money into the economy.

Larry Kudlow of CNBC said there would be no calamitous falling off the cliff, and stocks are confirming that. President Barack Obama has the upper hand, and the GOP will prepare for a strategic retreat.

Strategists at the Bank of America Merrill Lynch division laid out their vision of 2013 last week, offering comments that concern investors’ future decisions.

Among the predictions: Standard & Poor’s 500 index is on its way to 1,600, gold could hit $2,000 and the housing recovery will gain speed.

“We are bullish for 2013,” said one strategist at BofA. “We think a new high here for the market is not a very outlandish expectation.”

Unfortunately, following Federal Reserve Chairman Ben Bernanke’s announcement on the Fed’s decision to continue stimulating growth until unemployment drops, the market closed down 2.99.

The central bank announced it would commit to another round of Treasury purchases of $45 billion a month to replace the Operation Twist program that is expiring. That works out to $1 trillion a year of more government debt.

A Town Crier “50” stock, Microsoft Corp. (MSFT; $27.02), is being dropped as a Buy by numerous analysts but will continue as a Hold for the long term. Operating momentum and a weak share price are hurting Microsoft.

Microsoft has talked up sales of its Windows 8, launched Oct. 26, but sales of Windows-based personal computers have plunged 21 percent. Touchscreen PCs and tablets appear to be faring better than traditional PCs.

The company is adding more retail outlets to sell its Surface tablet and transforming several holiday stores into permanent Microsoft retail outlets.

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