Investing in RGR and SWHC...

[BaiHu]

A buddy of mine is an investor and he writes some interesting things from time to time on RGR & SWHC. He asked me to share this with you and tear it apart.

Enjoy!

http://seekingalpha.com/article/3956216-ruger-smith-and-wesson-staring-barrel-gun-booms-end

[farscott]

In general, I agree with the philosophy in the linked article. Gun sales have been on a tear for the last ten years, and a downturn is due. While those of us who are passionate about shooting will continue to purchase, we are a very small portion of the overall market and others will stop buying as those who want guns get them and are effectively out of the market. In addition, the next recession will dump a whole bunch of slightly used guns into the market as people decide that gun in the nightstand that never gets used might be better used to pay the light bill. Those guns re-entering the market will decrease the sales of new guns. It is like the old joke about Remington and the 870. Remington's biggest competition for the 870 is the last fifty years of 870 production. There is just no reason to pay the freight for a new 870 Wingmaster when one can buy one used for $300.

I also agree that the prices of RGR and SWHC do NOT reflect the upcoming softening of demand. Badness will ensue.