U.S. DOWNGRADED: WHAT TO DO NOW (SLV, GLD, TBT, TBF, TLT, SPY and QQQ)

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Standard & Poor’s (S&P) has just downgraded U.S. credit rating to AA+
from AAA. S&P analysis can be found here.

THis dongrade presents investment opportunities in SLV, GLD, TBT, TBF, TLT, SPY and QQQ.

S&P Analysis

Here is an overview of the analysis by S&P:

  • We have lowered our long-term sovereign credit rating on the UnitedStates of
    America to ‘AA+’ from ‘ AAA’ and affirmed the ‘A-1+’ short-term rating.
  • We have also removed both the short- and long-term ratings fromCreditWatch
    negative.
  • The downgrade reflects our opinion that the fiscal consolidation plan that
    Congress and the Administration recently agreed to falls short of what, in our
    view, would be necessary to stabilize the government’s medium-term debt
    dynamics.
  • More broadly, the downgrade reflects our view that the effectiveness,
    stability, and predictability of American policymaking and political
    institutions have weakened at a time of ongoing fiscal and economic challenges
    to a degree more than we envisioned when we assigned a negative outlook to the
    rating on April 18, 2011.
  • Since then, we have changed our view of the difficulties in bridging the
    gulf between the political parties over fiscal policy, which makes us
    pessimistic about the capacity of Congress and the Administration to be able to
    leverage their agreement this week into a broader fiscal consolidation plan that
    stabilizes the government’s debt dynamics any time soon.

Our Analysis
There will be no shortage of opinions in the media on the downgrade. The
problem is that the vast majority of the opinions do not make money for the
investors. I am refraining from writing my opinion; instead I am focusing on
helping investors make money.

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