Is Investing In Gun Companies A Safe Bet? I Don’t Think So But Some Might Disagree.

Leave a comment

I love when The New York Times, the so-called newspaper of record, publishes an interview with a quick-buck artist who bought shares of Smith & Wesson after the massacre at Sandy Hook and tells us that “some” Wall Street investors see gun companies as a good buy. Meanwhile, if you bother to read Julie Creswell’s entire article, you quickly learn that the real Wall Street money – institutional funds – are staying as far away from gun investments as they can. And the reason for this is very simple, namely, that putting money into a publicly-owned gun company represents an investment in an enterprise whose value has little or nothing to do with the health and business prospects of the enterprise at all.

nyt logo I recall that in September, 2012, there wasn’t a Republican who didn’t believe that all the polls showing Obama beating Romney had to be wrong. After all, how could a President get re-elected with an unemployment rate that was holding at 8%? It’s the economy, stupid. Remember that? Meanwhile when voters went to the polls in 1992, the unemployment rate was 7%, so no way Obama was going to go back to the White House again. And there wasn’t a retail dealer in the country, including myself, who could figure out what to do with all the inventory that was sitting on our shelves, because we knew that if Romney got elected, gun sales would collapse.

Well Romney didn’t get elected and several weeks later we had the awful shooting at Sandy Hook. And the result of that massacre was a spike in gun sales, and another spike when Obama started pushing a gun-control bill, and now another spike because Obama’s promoting his own gun-control initiatives regardless of whether Congress wants to go along or not. Even the NRA, which has been peddling a paranoid vision of Obama doing something drastic in his lame-duck term, admitted that the proposals were fairly mild and didn’t add up to all that much.

But let’s go back to the NYT article and focus on the data used by Julie Creswell to drive her argument home. The article contains a graphic showing how the stock prices of Smith & Wesson and Ruger have climbed over the last several years. Note that the S&W share price was around $16 in mid-2014 and then fell like a rock to under $10 at the beginning of 2015. During roughly the same period, Ruger stock dropped from $75 a share to $35. Both stocks began climbing again in the 2nd quarter of last year, but the price that is now attracting traders like Louis Navellier isn’t s reflection of the gun industry’s long-term health, it’s a classic bubble which, like all bubbles, will soon burst and the stock will die.

Why do I say that? Because the collapse of those stock prices back in 2014 was the result of the gun industry discovering that even after Sandy Hook and Aurora, the ability of the gun market to absorb new inventory could only go so far. It took gun makers a year to ramp up production once it began to look like a gun-control effort would succeed, but by the time all that additional product got through wholesale distribution and onto retail shelves, the mad rush into gun shops had slowed down.

The gun industry can talk all it wants about how fears of terrorist and/or criminal violence are creating a new customer base. They can have Colion Noir pitching to the inner-city market and Dana Loesch speaking on behalf of ‘America’s Moms,’ but it just doesn’t work. The only folks who remain convinced that you can protect yourself from gun violence by responding with gun violence are the folks who keep buying guns whenever they believe they won’t be able to buy guns. The truth is that investors who put their money into gun companies aren’t really investing in the gun industry, they’re investing in fears that the industry won’t survive another Sandy Hook. Maybe it won’t.

The Bad News For The NRA Is There Are Lots Of People Who Believe ‘Thou Shalt Not Kill.’

1 Comment

Yesterday I found myself in the company of 150 people from all over the United States who came to Washington, DC because they want to do something about gun violence. What they don’t want to do is entertain the stupid idea that more guns will protect us from violence and crime. That crap used to be promoted only by connivers like John Lott who used this insultingly unfounded nonsense to build a following on the red-meat lecture tour. But now it’s been taken up by lackluster, red-striped Presidential wannabes who will stoop no matter how low to try and spear a few votes. The group that convened in DC was decidedly of a different sort.

It was an eclectic assemblage, representing national and state-level advocacy groups, political and policy experts from within the Beltway and without, researchers, activists from all over the place, in every respect a serious-minded and, more important, an energetic group of folks. I have been following the gun debate going back to the 1960s; in other words, before there was a real debate. And I don’t remember a time when so many different types of people from so many different backgrounds were as committed to serious and continuous efforts to reduce or eliminate the violence caused by guns. And just in case any NRA sycophant or 2nd-Amendment devotee wants to argue the case, let me make one thing completely and perfectly clear: it’s the gun stupid, it’s the gun.

So I sat, watched and listened to speakers at the National Gun Violence Prevention Coalition Annual Meeting and I came away with the following thoughts. First, the level of gun violence, both mass shootings and individual events, can no longer be justified or excused just because the 2nd Amendment protects individual gun rights. Since August, for example, there’s been a guy or maybe guys who have been shooting at motorists riding through Phoenix on Interstate 10. To date there have been at least eleven confirmed shootings, and the only good news is that’s it not that easy to hit someone in a moving car.

Now if you can explain to me how a lawfully-armed citizen walking around with his or her gun should be considered as a bulwark against this kind of crime, I’ll meet you tomorrow at the Morton’s Steakhouse of your choice and pick up the tab. According to the Gun Violence Archive, by year’s end the death toll from shootings may exceed last year’s number by 20 percent. The day in, day out reports of what appears to be an endless spiral of gun violence has clearly aroused more than its usual share of concern, and this concern was clearly evident at the DC conference this past week.

The NRA’s response to this situation is to have Chris Cox find an instance where an individual, in this case Vester Flanagan, used a legally-purchased gun to commit mayhem, the “proof’ that more laws won’t do anything to stop violence caused by guns. This argument is so dumb I’m surprised that even a twit like Cox would try to foist it on the members of the NRA. To follow his logic, the next time that there’s a pile-up on the Interstate we’ll understand why speed limits don’t help to save lives.

I spent a few minutes at the conference speaking quietly and emotionally to the parents of a young man who was among the 12 audience members killed in Aurora by James Holmes. They told me they needed to help prevent more tragedies like the tragedy that resulted in the loss of their son. I told them I don’t think it’s possible to understand what happened in Aurora in rational terms, but what they are doing will have a rational and objective end. And the end will be that gun violence will disappear because ways will be found to respond to their courage and their strength. There is, after all, a moral imperative called Thou Shalt Not Kill.

 

Follow

Get every new post delivered to your Inbox.

Join 220 other followers

Build a website with WordPress.com
%d bloggers like this: