Because of US downgrade, people dump stocks and buy treasuries, wait what??

This is an classic example of irrational investors and how to take advantage of market timing to make easy money. Below, news of the US downgrade by S&P sends investors into a frenzy, they dump stocks (profitable) in favor of treasuries that were just downgraded by S&P. This is akin to me telling you that I own two stocks, stock A and Stock B, and the credit bureaus just said Stock A is not as stable or creditworthy as it used to be, so you go off and sell a bunch of Stock B and buy more of the unstable stock A. They sell, I’ll buy. Here’s the article:

NEW YORK (AP) — Government bond prices are rising as a stock market rout is sending traders into assets considered safe.

Investors are selling stocks Monday in response to a downgrade of U.S. long-term debt by the rating agency Standard & Poor’s. S&P took away the country’s AAA rating late Friday and downgraded it to AA+.

The flight from riskier assets like stocks is sending traders into Treasurys. They’re buying the same bonds S&P downgraded. The Treasury market remains one of the world’s deepest markets at $9.3 trillion. Treasurys are also considered the easiest security to buy and sell quickly.

In Monday afternoon trading, the price of the 10-year Treasury note is up $1.81 for every $100 invested. Its yield sank to 2.36 percent from 2.57 percent late Friday.

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