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When in Africa do as the Africans. Long SWHC and RGR

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8

February 25, 2009 – Comments (10) | RELATED TICKERS: RGR , OLN , SWHC

Every morning in Africa, a gazelle wakes up. It knows it must outrun the fastest lion or it will be eaten. Every morning in Africa, a lion wakes up. It knows it must run faster than the slowest gazelle, or it will starve. It doesn't matter whether you're a lion or gazelle - when the sun comes up, you'd better be running.  

NOTE: I do not like guns. But I think it is a civc responsibility to own one. I am long RGR and SWHC. I do not like either companies numbers, P/E or management. This is my second write up on SWHC. I wrote on February 17, 2009: Long Smith & Wesson Holding (SWHC).

No doubt bringing African economics into the White House and US will bring in the civil unrest that goes with it. As the government seizes assets by nationalization "to helps the people" or "brings stability", the nation's masses become impoverish and a "super class" of oligarchs are created. The masses are left to fend and defend for themselves.

Many Americans, that are financially literate and knowledgable of history will be converting their "paper wealth" into hard assets (Reference: Worried Investors Want Gold on Hand - WSJ.com 25 Feb 09). Sector Snap: Pistol makers up since Obama election

If you bring hard assets into your home, you will also need the tools to protect them.

The Consumption based economy is not dead, as I have been stating, just go to a gun show or try and buy ammo. If you find ammo, you will be paying a high premium.

Again, I beg you, DO NOT TRUST ME, GO LOOK FOR YOURSELF! Try buying 9MM or 5.56 etc... please report back. If you are a "gun nut", tell us what you are seeing.

Most Americans are moving in anticipation of the Robert Mugabe economic plan Obama is bringing forward.

Obama sounds like Mugabe here:

Marc Faber about Zimbabwe School of Economics 06 Feb 2009.

 Jim Rogers: I expect to see civil unrest in the US, 24 Feb 2009

FYI - Ron Paul Weekly Report, 20 Feb 2009

Ron Paul "You cannot re-inflate the bubble" 25 Feb 09

 

Nice flood of positive stories on Yahoo Finance, from 17 Feb 09:

UPDATE - Smith & Wesson to nearly double revenue with......at Reuters(Wed, Feb 4)

Four Must-See Charts of the Day: Small-Caps to Watchat TheStreet.com(Tue, Jan 27)

[video] Smith & Wesson Still Smokingat TheStreet.com(Sun, Jan 18)

[$$] Fitz Bits: Pull the Trigger on Smith & Wessonat RealMoney by TheStreet.com(Fri, Jan 16)

Consumer in the Crosshairs, but Smith & Wesson Still ......TheStreet.com TV(Fri, Jan 16)

[video] Consumer in the Crosshairs, but Smith & Wesso......at TheStreet.com(Thu, Jan 15)

3 Stocks Bucking the Downtrendat Motley Fool(Mon, Jan 12)

3 Winning Stocks for a Challenging Yearat Motley Fool(Mon, Dec 22)

Smith & Wesson Misses the Bear at Motley Fool(Thu, Dec 18)

 

 

10 Comments – Post Your Own

#1) On February 25, 2009 at 4:17 PM, abitare (80.88) wrote:

FYI - Another good video here from Ron Paul on Gaza 20 Jan 09, deflation and "we are in for big trouble"

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#2) On February 25, 2009 at 5:07 PM, abitare (80.88) wrote:

I would point out, both SWHC and RGR have had big run ups in the last month. I would recommend taking a look at the charts of both. Both seemed to get run up and collapse into options expiration, so becareful into Options expiration week.

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#3) On February 25, 2009 at 5:12 PM, ByrneShill (77.85) wrote:

You are funny.

If everyone in your country buys guns, maybe a bulletproof vest would be a good idea.

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#4) On February 25, 2009 at 5:23 PM, DarkToast (41.89) wrote:

Smith & Wesson recall.

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#5) On February 25, 2009 at 5:30 PM, Seano67 (25.12) wrote:

"No doubt bringing African economics into the White House and US will bring in the civil unrest that goes with it. As the government seizes assets by nationalization "to helps the people" or "brings stability", the nation's masses become impoverish and a "super class" of oligarchs are created. The masses are left to fend and defend for themselves."

 

Ironically enough, Africa is the one continent that's been affected least by the global meltdown, primarily because the Africans have traditionally tended to eschew credit in favor of a 'pay as you go' type mindset.

So maybe we can learn a little something from Africa....

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#6) On February 25, 2009 at 5:40 PM, abitare (80.88) wrote:

ByrneShill,

No doubt. FYI- you can Google: abitare Leasons from the Argentina Collaps.

Lessons from Argentina's Economic Collapse

Nov 2, 2008

DarkToast ,

I saw the story, but the stock was still up, today. That is a ctually a good sign.

Seano67,

Africans were poor before, they are poor now. So you are right there has been little change. 

 

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#7) On February 25, 2009 at 9:48 PM, SuperPicks (29.20) wrote:

Thank you,

"I am long RGR and SWHC. I do not like either companies numbers, P/E or management. "

That's what I needed to here to get me to simply jump on board with the idea.  I saw this past week that I had red thumbed SWHC most likely to valuation issues.  But like everything else in the market, when a sector is hot, and things make fundamental sense, it may provide worthwile to jump on board the train and ride it.  Especially since super high valuations exist in other sectors which I am short on (gold & biotech; plus education-no short position yet).

I'll likely get some time to close out the red thumb on SWHC and reverse it by next week and go long the other gun symbols. 

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#8) On February 26, 2009 at 1:52 AM, AnomaLee (28.81) wrote:

What you say about ammunition is spot on. As an owner of an AR-15 I am becoming more concerned about legislation that will limit AR purchases and supplies in the future. Since I have no intention to have an arsenal of weapons or plans to start a militia I decided to avoid the mania and remain with the supplies I have.

The political risks to gun owners is what has been driving this mania, and whenever the U.S. scales down its operations overseas it will severely impact rifle manufacturers(especially Colt) and the supply of ammunition. The companies which receive funding for the future replacement of the M-16 will also be severely impacted.


SWHC

"Feb 4 (Reuters) - Smith & Wesson Holding Corp (SWHC.O), known for its 156-year-old handguns business, is planning to almost double its annual revenue and grow through selective acquisitions in the next three to five years."

I don't like the sound of that. Smith & Wesson is trading at a high premium to assets and they don't have much cash on hand. 

If you have a position I would monitor it closely. I wouldn't be surprised if SWHC were worth less than two thirds of it's present value in the next 3-5 months and trading back in the sub $3 range. It's probably a strong short candidate from a standpoint of tech. analysis.

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#9) On February 26, 2009 at 4:51 AM, SuperPicks (29.20) wrote:

Geez, I looked back at my picks and saw that SWHC was my worst performing red thumb...and I think I'll wait for the negative score to pull back some before closing!  Put in green thumb picks for the other firearms plays.

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#10) On February 26, 2009 at 6:50 AM, abitare (80.88) wrote:

ALCON,

Good replies here.  

I am long these two, mainly for the story and the extreme rise in demand, which I think will/is going to get out of hand. Plus, "The Street" etc... are pumping these two stocks. 

Take a watch of this recent Street propaganda:

I cannot say that I would buy more here. I might actually buy some Puts here for protection. Or if you wanted to buy it here, I might buy puts and convert them to shares.  

Also take a look at these two during options expiration. They go a little nuts (RGR specifically).

AnomaLee

Good reply, that you for the update and analysis. I got into SWHC at $2.50 ish and a little more at $3.00. I might be a long term holder of SWHC, as the gun story will like continue to work. 

I agree on the technical standpoint. I am not a fan of buying something that has had a relative parabolic run up. But the stocks are ignoring bad news, pretty well.

Sorry for the sloppiness of my posts. I have been short on time. 

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