This latest US debt downgrade is a buying opportunity for us contrarians. I say that because we had the same (profitable) setup the last three times the ratings agencies took Uncle Sam’s credit rating down a peg.
You might find that last sentence surprising. Three times? Indeed, the US government has seen its debt downgraded on three different occasions: 2011, 2023 and most recently a couple of weeks ago.
You can be forgiven for not remembering all of these: In some cases (2023 comes to mind), they didn’t really make headlines. In others, they set up a small dip in stocks (and stock-focused closed-end funds yielding 8%+) that was well worth buying.
Let’s go through all three occasions and see what they can tell us. We’ll also…
