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


By Charles Lewis Sizemore,



) -- 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%.

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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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Still, investors are scared, and the markets are in chaos. You need to do something, right? Well here are a few suggestions:

1. Stay out of Treasuries.

Do I think the U.S. government is at risk of default? Absolutely not. I have no doubt the bonds will be paid. But at a pitiful 2.39%, investors are locking in a cash return that is almost sure to disappoint -- and almost certainly capital losses to boot. When the markets return to some semblance of normal, yields will rise back to a more sensible range of 3% to 4%. That means that investors buying today at 2.39% will see their "safe" Treasuries decline in value. More adventurous traders might want to short Treasuries in the futures markets or using an inverse ETF like the

iShares Lehman Short Treasury Bond

(SHV) - Get Report


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2. Stay out of gold.

I understand the argument that gold is insurance against capital market instability. I get that. But would you buy insurance on your home after it already had burned down? Or on your car after it already had been totaled? In the real world of insurance, no agent would sell you a policy after the event has happened, but in the financial world, "agents" are all too happy to do so.

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Remember, gold has no "intrinsic value" as it pays no income and has no earnings. So, it is impossible to ever say whether gold is "cheap" or "expensive." All we can say is that gold has been in a raging bull market for more than a decade, and its price action is starting to look like a lot of other financial bubbles we've seen in the past.

If you missed out on gold's recent gains, you're probably kicking yourself. Don't. Once the dust settles, it is likely to be the gold bugs who are kicking themselves. I recommend avoiding gold, but more adventurous traders might want to short it, like Treasuries, in the futures market or using an inverse fund like the

PowerShares DB Gold Double Short ETN

(DZZ) - Get Report


Related Article: 3 Reasons the Gold Bubble Will Burst

3. Use this as an opportunity.

Buy some of the solid blue chips you've been itching to buy "if only they were a little cheaper." I recommend American and European companies with rock-solid balance sheets, consistent dividends and a large presence in emerging markets. These are the kinds of companies you know will survive this mess intact. If you end up being a little early, what of it? If you buy a good company at a good price, a little short-term volatility is nothing to be afraid of.

Some stocks to consider as value buys include:


(NSRGY) - Get Report



(UL) - Get Report


Johnson & Johnson

(JNJ) - Get Report



(MSFT) - Get Report



(INTC) - Get Report

. I should mention that Microsoft and Johnson & Johnson now have a higher credit rating than the United States of America!

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I understand it is scary out there. But it is times like this when an investor can differentiate him or herself by taking a bold, contrarian stand. Use the current mood of hysteria to your advantage. Sell down your expensive bond and gold holdings and reallocate your funds where you can find real, durable value.

Charles Lewis Sizemore, CFA is the editor of the Sizemore Investment Letter , and the chief investment officer of investments firm Sizemore Capital Management.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.