Tuesday, 26 January 2010

It's Time to Buy a Gun

By Jeff Clark 

"Holy crap!" My wife screamed 
as she squeezed the trigger 
of the .38 caliber handgun. 
The force of the blast pushed her arms skyward. 

An instant later, the bullet 
sliced through her target, 
splitting its head in two. 
Each half flapped back and 
forth in the jet-wash breeze 
of the titanium shot. 

"Nice shot, ma'am," said the
 head-phoned, bearded 
shooting-range attendant. 
My wife grinned proudly. 
"I'll take this one," she said. 

I walked over to her and 
kissed her on the forehead.
 "Merry Christmas,
" I said and handed 
her an application for a gun 
permit. 
Forget the diamond earrings. 
Forget the little blue Tiffany 
boxes filled with tiny, 
overpriced trinkets. This year, my wife asked Santa to put a gun under the tree. 

"But why do you want a gun?" 
I asked when the subject 
came up last Thanksgiving. 

"I don't know," she 
shrugged. "I guess with 
everything going on in the 
world these days, 
I'd like to get a gun before 
they're outlawed completely." 

My wife certainly isn't alone 
in that sentiment. As a 
local gun dealer explained to 
me, 
"The biggest boost to sales 
always happens when the government proposes some 
new law to restrict gun 
ownership." 

It was fear of new 
gun-control laws that 
caused firearm 
sales to skyrocket 
immediately following 
President Obama's election.
 As of October 2009, FBI background 
checks on firearm sales – 
a leading indicator for the 
trend of firearm sales 
themselves
– are up more than 18% 
over the same 10-month 
period in 2008. 

But good times for 
gunmakers are almost 
always temporary. 
The boost in sales 
caused by political uncertainty
 never lasts more than a few months. 
That's a big reason why 
gunmaker stocks – 
despite achieving high 
double-digit sales 
growth – haven't really 
participated in the market rally 
over the past year. Stocks in 
the 
sector trade, on average, 
for only seven times earnings and 0.7 times sales. 

However, there's 
something different happening 
this time. In the 22 years I've known 
my wife, not once, ever, has 
she even considered owning 
a gun... until now. 

Let's face it, our world is 
vastly different today than it 
was a few short years ago. 
We've given up countless 
freedoms in the name of 
"national security." 
The lazy members of our 

society demand "More! 
More!" while hard-working 
and 
industrious people are 
forced, through confiscatory tax rates, to weave an even larger 
portion of the social safety net. 

Government grows ever larger 
like a leech engorging on its 
host, while the individual 
and his right to privacy shrink. 

There's a growing trend 
oward survivalism. 
There's a genuine fear – 
among people who 
ought not have any cause for concern – that what they have and what they've earned 
can be taken away from them. 

That's why people are buying 
gold. That's why they're stocking 
up on ammunition. 
That's why my wife wanted a 
gun for Christmas. And that's why shares of gun 
manufacturers may be the best bargains in the stock market 
right now. 


The stocks haven't rallied with 
the market, so they won't 
give up much if a significant 
correction takes hold. 
They're fundamentally cheap. The companies have 
strong balance sheets with 
plenty of cash on hand. 
And gun sales are increasing 
during
a time in which sales of 
nearly everything else are 
falling. 

I recently told my 
Advanced Income subscribers 
about a 
covered-call strategy on a 
gun stock that offered 
a 7% immediate return and the 
potential for 26% gains over the 
next six months. It's one 
of the lowest-risk trades in the 
market right now. 

For more information on 
Advanced Income, click here. 

Best regards and good trading, 

Jeff Clark


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