The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (InvestorPlace) -- After the stock market tanked Monday, thanks in part to Standard & Poor's historic downgrade of the United States' credit rating, investors are left with one enormous question on their lips: What do we do now?
Well, I have three tips for you -- and they may not be popular. That's because I advise running against the herd by selling gold, avoiding Treasuries and hiding out in blue-chip stocks.Why run against the herd? Well, one big reason is the Treasury market itself, which should be linked most closely with the S&P downgrade. In a normal world, this would cause yields to rise, as investors would demand a higher yield in response to lower credit quality. Yet in the upside-down world of today's market, yields instead fell. Investors sold off their stock positions because of the bond rating downgrade ... then promptly plowed their money into downgraded bonds. The 10-year Treasury now yields under 2.4%.
But don't panic. Nothing fundamentally has changed in the economy. It was bad before the announcement, and it still is bad today. S&P's announcement changes nothing. The Federal Reserve has said it will continue to accept U.S. Treasuries as collateral and that, as far as the Fed was concerned, Treasury debt still counts as AAA for the purposes of bank capital requirements. In other words, the people that run the international banking system don't appear to be all that worried.
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