March 6 - A record backlog of orders for Smith & Wesson following the Newtown school shooting leads to a discussion among Breakingviews columnists about the panic buying of guns and the bubble in the market.
Approaching the three month anniversary of the mass murders at an elementary school in Connecticut. -- had repercussions across the country including financial ones. We've seen private equity firm announced it was gonna sell its holding its ownership of a book and company received calpers a big pension funds it's gonna sell. We're in the first evidence now all of exactly what it's meant for sales of guns -- United States with the western reporting. Last night would've been extraordinary the company they had to have raised their guidance their factories are working full out. They couldn't meet it could even come close to mean demand they say stores are sold out they can't keep guns in stock. And that the order backlog the number of guns that people want but they tell the company produced. It it's up to six -- at 8% to eighty million that's a record that's are ahead resent twice -- it is that it's kind of it's kind of. Quite as his old panic buying services. He sought -- -- before in the in the 20082009. Election period of where -- and Obama and others that got from Chicago is gonna come and take their guns away. And you had in in the run up to this election you have this whole could confiscate -- Propaganda going out by the NRA and witches and basically -- for Smith and Westminster -- all the other manufacturers. And now it's an -- after you have the city hook school shootings you've had this huge huge surge of people buying ammunition. Buying particular assault style weapons and high capacity magazines because -- members at a glance at the killer who killed twenty children and six teachers. Had an AR fifteen with a thirty Clinton magazine. So there's his belief that this stuff and if you look at the polls people say that they would they support -- a ban these things but it's unlikely that either of those two pieces of legislation was passed. Past -- house -- representatives at least. The the current one so what are you thinking in terms of what it means go for -- effort on the ups -- -- realized that all -- well there's there's talk. Bans any sort of even very limited and taking place it's gonna -- Demand for guns. A lot of people you know there's there's the whole kind of -- also kind of feed on themselves you know if if -- store only has like two of a certain type of -- you want that you're gonna rush out and get it because you hope that you're there before the next person gets it. Does that guy might wanna pick and I want to know what zombie apocalypse -- back -- the other problem is you know. -- this but -- -- this is a classic bubble. So let's just take that the politics out of it take that the emotion out of it it's just another bubble you have a panic in people rush to buy it. That's the sort of demand the the manufacturers rushed to increase supply and guess what happens limit in 69 months' time when people say oh okay. They didn't take my guns away. The government hasn't trying to go after me zombies are not ruling the earth. I don't know I -- he -- and what we're gonna panels that just like it did in 20119. In the form the backlog dropped by 75%. And that in less than a year. And what's the Smith wasn't stopped optimism it's not really strongly in this girl -- there like an up 30% certificates that they're Cabela's up 30% so far this year. Sturm -- is up but 25% so far this year. The extent Northwestern's a month 1520%. In history will repeat itself here. And at some point this bubble will burst and these stocks will fall will be to. -- and though keep an eye on that and we'll be back with more breaking news tomorrow.