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Fear of Obama drives gun stocks higher

Posted Feb 25 2009, 02:02 PM by Anthony Mirhaydari
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Rising concern over increased regulation from the Obama White House has gun buffs stocking up on the latest tactical rifles and pistols. This helps the fortunes of gun makers Smith & Wesson (SWHC) and Ruger (RGR) as well as specialty retailer Cabela's (CAB), which specializes in firearms and hunting gear.

Ruger reported Tuesday that gun sales increased 81% in the fourth quarter on new products and "robust firearms demand." Its order backlog now stands at $48 million. Smith & Wesson plans to double revenue within the next three years and reported increased sales from "speculation on the outcome of the presidential election." Cabela's reported that same-store sales rose 2.2% over the holiday election season -- a time of great distress for other retailers.

With that kind of performance, it's not surprising investors are flocking to these names. Over the last week, while the S&P 500 is down 2%, Smith & Wesson is up 56%, Cabela's has gained 35%, and Rugers added 44%.

Based on my conversation with Wedbush Morgan analyst Rommel Dionisio, much of the sales increase has been in self-defense firearms like military-type semi-automatics or pistols. Sales of traditional bolt-action hunting rifles and shotguns remain steady. Cabela's spokesman Joe Arterburn notes that many of these customers are first-time buyers who "have never had a handgun in their home but believe now ... is a good time to buy them." In other words, people aren't looking to hunt deer; they're worried about other people.

The question, of course, is whether this performance will continue or will end up being a brief, post-election buying binge. According to the FBI, background checks on potential gun buyers increased 29% last month over the same period in 2007. Although Obama has always played down the gun rights issue, many seize on his off-the-cuff remarks last year that people "cling to guns and religion" during times of economic stress. For the record, he has tried to soothe jumpy nerves: "I believe in common sense gun safety law, and I believe in the second amendment. And so, lawful gun owners have nothing to fear."

Nevertheless, as the economic picture darkens, it's more than possible people will stop fearing our new president and start worrying about a Mad Max-like apocalyptic scenario. Just look the huge increase in the popularity of physical gold. Sales of the popular American Eagle gold coin are up four-fold while commodity investors are increasingly opting for physical delivery of gold bullion instead of settling futures contracts in cash. Bankers are reporting that more clients are hoarding gold in their vaults.

Sure, this is crazy. But remember that humans aren't rational and that fear is the strongest of all emotions. Forget traditional defensive sectors like utilities and healthcare. Go with guns and gold.

Update: Attorney General Eric Holder told reporters Wednesday that President Obama would like to "reinstitute the ban on the sale of assault weapons" that expired in 2004 under the Bush administration. Holder said the ban would not only be a "positive move" by the United States, but would help reduce the trafficking of guns to the drug cartels in Mexico. It looks like the gun boom is far from over. 

Image credit: jeroen020

Disclosure: The author does not own or control shares in any of the companies mentioned.

Anthony Mirhaydari is a contributor to the Strategic Advantage investment newsletter. He can be contacted at anthony.mirhaydari@live.com. Feel free to comment below.

Related reading:

Beginning of the end for falling home prices?

The shrinking of American retail

Forget gold. It's time to invest in platinum

Why Eastern Europe's meltdown matters

Comments

 

It doesn't hurt to be prepared, Think about it! Spend the country into poverty, crime goes up, the next thing you know, they say there will be a need for some sort of Obama citizen patrol, (AKA gestappo) Which, no doubt they will only enlist the help of dregs, and terrorize law-abiding citizens. Then everyone will need to live in Urban civilian units for safety, and the government will take over the farms and all other means of production. It might not happen, but read your history. If it walks like a duck, and quacks like a duck....

Heard a report in January that one gun association voted Obama its salesman of the year.  The association indicated the firearm industry was one of the bright spots in the economy in the 4th quarter of 2008.  Gun manufacturers couldn't keep up with demand and had huge backlogs for gun orders with citizens' accelerated efforts to purchase firearms before any legislation could be passed to limit gun ownership.

Check out some of the sites that sell MRE's. Chances are good you'll find that they too are experiencing a BIG increase in sales, to the point that they are low or sold out of alot of their product.  No wonder I keep getting back-ordered on my invoice!!

The rise in sales is purely about gun rights and the liberal view (Obama) of guns.  I bought my first gun (AR-15) when I saw the possiblity of Obama getting elected.  Our founding forefathers wrote many many opinions on the need for citizens to have guns.  Their purpose was not so we could hunt for food.  When going into a military position, part of your oath is to "support and defend the Constitution against all enemies foreign and DOMESTEC."  Americans have the responsibility/duty to put down tyrany to the Constitution.  The founding forefathers expected that Americans would use their weapons as a last resort to defend the Constitution which also includes "certain inalienable rights endowed by our creator."  Some of these rights include the right to bear arms, right to life (abortion), personal property rights, right to free speech (now a federal crime to peacefully protest outside of abortion clinics).

Most Americans are unwilling to risk loosing their lives for these rights but softtouch's comments above hit the hammer on the nail.  Pecemism in our nation about it's future and economic hardships could cause this battle of idealogy to turn physical.  Obama's voting record appears to be that of a Socialist.  It absolutely blows my mind how many Americans are willing to throw their rights away for the promise of security or prosperity.  What happened to the country of principled thinking?  This is why Americans are arming themselves; to be prepared for the confrontation when/if it comes.  Let's vote based on principle, write letters to your elected officials, run for office, teach your children principled thinking, defend the right to life and if that fails, there are other alternatives...

The National Guard will be called out via Executive Order upon American citizens IF the administration thinks it necessary.  They are after the guns and will procure them at any and all costs/means.

We have to take back our country before the government fully deploys those Raytheon microwave weapons on all protestors.

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What a bunch of wacko's

The only protection a gun is going to get you is maybe and I do mran maybe in the case of a home invasion. What are your chances of being home when it happens ?

If you think it's going to protect you from the goverment think again..... They have far better weapons than you could ever hope for. What about bullets ? ok you've got 1000 rounds stashed uo... Do you know how long that would last in a conflict? The government doesn't have to control your guns, all they have to do is pass a law stating that bullets only have a six month shelf life.... They can do it you know.

To all you people buying guns for the first time... for gawds sakes try not to shoot your eye out.

To all you right wing radicals.... give it up... you lost

Well, I am a gun dealer in NC and the increase in gun sales comes from Obama and nothing else. People here are afraid that they will not be able to ever get a gun because Obama is going to take them. Check his voting record and you will see his anit-gun all the way. Well, what guards him.Knives, sticks, etc. Nope Guns. Actors and Actresses are anti gun but yet their body guards, which I personally cannot afford, carry concealed weapons.  Well they are all hypocrites.  Guns dont kill, it is the person behind the gun.  A lot of the Yankee city dwellers don't understand a gun and why is it is used.  Hey, why not outlaw cars, trucks, medicines, cleaners, windows, etc. The list is endless as to what should be banned. Responsibility is what is lacking. People are responsbile for their actions and should have to pay.

You don't like guns, then I don't have a problem with that but why should you be allowed to dictate to me what I can and cannot LEGALLY own.  I don't think you should make $100 an hour, but you do.  Blame Obama 100% for the increase in gun sales. I have seen people buy handguns that have never even shown any interest in them in the past.  If you have a gun in every home in the USA, then how many criminals are going to break in. A whole lot less than what are robbing us now. If you athink I am full of it, then go to the prisons and ask the criminals. If a criminal knows he can get shot, then he isn't as likely to break into my home. Further, if he does break into my home, then yes I am going to shot him and if I don't have a gun then I am going to use a bow and arrow or a knife or spear or anything else that I can instill into his body a lethal blow.  A dead criminal doesn't steal or inflict hard anymore. You say this is brutal, well my comeback to you is BS.

What would you do if someone broke into your home and was trying to murder your child. Would you sit there and let the crimanal commit the deed. I am not. I plan to stop him/her the best way I can.  Instead of taking guns, teach about guns and the responsible ownership of them. I had much rather have my child out hunting or shooting than out stealing or doing drugs. It is time you stop blaming guns and blame the parents of the criminals.  Hold them accountable for their childrens deeds. Further, I hear so many parents say I don't spank. BS. kick their butt if the need it. My parents spanked me and I am better for it. They taught me right or wrong. I have one other thing to say. Why is Obama considered an African American. Does he have dual citizenship He is an American. He isn't a african negro, except a small percentage. He is interracial with a white mother(gives him 50%, and a father that was a Arabic Kenyan(85% Arabic and 15% African Negro) How do you get black american out of that.  If that is the case, then I am Native American.I think the whole country is headed for a hell of a mess thanks to the political system we have. Politicans, stop kissing butt, and do what youa re suppose to do. But, I guess you have to worry about being reelected huh. Do your job and I will vote for you otherwise I will not.  Term limits of 2 terms of one 8 year term with no reelction That way you can sit in Congress and do what needs to be done. Now you work 1 year at most and then 3 years at campaigning to be reelected. You take away my gun rights and I think you will be asking for trouble from a lot of people. Do it if you must, but be prepared to see a civil uprising like you have never seen before. I see gun owners every day and I know their attitude.  Those that say they dont like guns in the home are the first to call and make trouble if something happens. Usually a royal pain in the butt. Take care of yourself. Do you think the police can take care of everyone everyday. Well, how can an office take care of 1000 people. Isn't possible. I was raised with a gun in my hand and I am proud to be a hunter as well. Do away with the gun if you wish, but what are you going to do when all the animals invade your territory. I say stop the people from taking the animals land and give it back. You have a problem with them as they may attack your children but i the same breath you don't want guns or think hunting is cruel.Well, you need to get a life. Bottom line is that people want what is best for them and nothing more. Old saying here in the south. A man who takes a knife to a gun fight is one dumb sucker. Thank you for listening to the rambling. The removal of guns doesn't decrease crime, it increases crime. Think I am wrong, then study Australia, Europe and other such countries.

A criminal isn't as a general rule going into a home where he thinks he may get shot or killed.

Well, I am a gun dealer in NC and the increase in gun sales comes from Obama and nothing else. People here are afraid that they will not be able to ever get a gun because Obama is going to take them. Check his voting record and you will see his anit-gun all the way. Well, what guards him.Knives, sticks, etc. Nope Guns. Actors and Actresses are anti gun but yet their body guards, which I personally cannot afford, carry concealed weapons.  Well they are all hypocrites.  Guns dont kill, it is the person behind the gun.  A lot of the Yankee city dwellers don't understand a gun and why is it is used.  Hey, why not outlaw cars, trucks, medicines, cleaners, windows, etc. The list is endless as to what should be banned. Responsibility is what is lacking. People are responsbile for their actions and should have to pay.

You don't like guns, then I don't have a problem with that but why should you be allowed to dictate to me what I can and cannot LEGALLY own.  I don't think you should make $100 an hour, but you do.  Blame Obama 100% for the increase in gun sales. I have seen people buy handguns that have never even shown any interest in them in the past.  If you have a gun in every home in the USA, then how many criminals are going to break in. A whole lot less than what are robbing us now. If you athink I am full of it, then go to the prisons and ask the criminals. If a criminal knows he can get shot, then he isn't as likely to break into my home. Further, if he does break into my home, then yes I am going to shot him and if I don't have a gun then I am going to use a bow and arrow or a knife or spear or anything else that I can instill into his body a lethal blow.  A dead criminal doesn't steal or inflict hard anymore. You say this is brutal, well my comeback to you is BS.

What would you do if someone broke into your home and was trying to murder your child. Would you sit there and let the crimanal commit the deed. I am not. I plan to stop him/her the best way I can.  Instead of taking guns, teach about guns and the responsible ownership of them. I had much rather have my child out hunting or shooting than out stealing or doing drugs. It is time you stop blaming guns and blame the parents of the criminals.  Hold them accountable for their childrens deeds. Further, I hear so many parents say I don't spank. BS. kick their butt if the need it. My parents spanked me and I am better for it. They taught me right or wrong. I have one other thing to say. Why is Obama considered an African American. Does he have dual citizenship He is an American. He isn't a african negro, except a small percentage. He is interracial with a white mother(gives him 50%, and a father that was a Arabic Kenyan(85% Arabic and 15% African Negro) How do you get black american out of that.  If that is the case, then I am Native American.I think the whole country is headed for a hell of a mess thanks to the political system we have. Politicans, stop kissing butt, and do what youa re suppose to do. But, I guess you have to worry about being reelected huh. Do your job and I will vote for you otherwise I will not.  Term limits of 2 terms of one 8 year term with no reelction That way you can sit in Congress and do what needs to be done. Now you work 1 year at most and then 3 years at campaigning to be reelected. You take away my gun rights and I think you will be asking for trouble from a lot of people. Do it if you must, but be prepared to see a civil uprising like you have never seen before. I see gun owners every day and I know their attitude.  Those that say they dont like guns in the home are the first to call and make trouble if something happens. Usually a royal pain in the butt. Take care of yourself. Do you think the police can take care of everyone everyday. Well, how can an office take care of 1000 people. Isn't possible. I was raised with a gun in my hand and I am proud to be a hunter as well. Do away with the gun if you wish, but what are you going to do when all the animals invade your territory. I say stop the people from taking the animals land and give it back. You have a problem with them as they may attack your children but i the same breath you don't want guns or think hunting is cruel.Well, you need to get a life. Bottom line is that people want what is best for them and nothing more. Old saying here in the south. A man who takes a knife to a gun fight is one dumb sucker. Thank you for listening to the rambling. The removal of guns doesn't decrease crime, it increases crime. Think I am wrong, then study Australia, Europe and other such countries.

A criminal isn't as a general rule going into a home where he thinks he may get shot or killed.

As a range safety officer, I have seen a huge increase of new gun owners who want to learn the proper way to handle a firearm. Carry permits in my state are up 7,000 in 2008 over 2007. I think people feel the time as come to prepare for the future, which may mean they have to protect themselves and property from those who feel everything belongs to everyone and want what is not theirs. Attitudes have really changed in the past 5 years.

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