We flagged this trend early on. We were scanning a sea of red quotes early last December and noticed that the only greens were the two publicly traded gunmakers, Ruger and Smith & Wesson.
Recessions always have their defensive plays. Usually it’s canned goods, or drugs. This time it’s obviously different, cause it’s guns. As in, people are worried that they’ll have to defend their homes with firearms and that they’ll have to kill people to maintain what they’ve got. Yeah, it’s that kind of fear.
Well the rallie’s continued. Smith & Wesson (SWHC) (disclosure: we own a small amount; we wish we had more) has been a real darling, gaining over 13% today. Ruger (RGR), meanwhile, is the only S&P 500 stock making a new 52-week high.
Still, we can’t help but think that the rally in these two stocks is symptomatic of something deeper, more fundamentally wrong with the economy. We’re too lazy or scared to go out and actually get armed, so instead we sit at our computers and click BUY S-W-H-C.