Game Theory: Why the Swine Flu Panic is Good

Backlog Orders up 72%... Name That Company

Armageddon trade of the day... Sturm, Ruger & Company, Inc:

Designs, manufactures, and sells firearms in the United States. The company offers its products under ‘Ruger’ name in four product categories, including single-shot, autoloading, bolt-action, and lever action rifles; over and under, and side by side shotguns; rimfire autoloading and centerfire autoloading pistols; and single action and double action revolvers.

It also happens to be the only stock in the S&P 500 (according to a comment this morning on CNBC) reaching a new intra-year high today.



HoweStreet details:

Its revenues and earnings are increasing, and the company's backlog in orders jumped 72 percent from the 3rd quarter to the 4th quarter.

Why is the outlook improving for gun manufacturers?

Maybe because while other industries are sliding down a slippery slope of lower demand, the output of U.S. small arms manufacturing is forecast to grow at an annual compounded rate of 2 percent between 2008 and 2013.

The sales of both guns and ammo are flying partly due to worries about economic calamity and partly because the National Rifle Association is fanning the flames of rumors that President Obama wants to confiscate guns and raise ammunition taxes by 500 percent.

Will President Obama tighten the rules on gun sales? I have my doubts. With the economy collapsing, he has bigger fish to fry. Nonetheless, if history is any guide, the NRA will constantly ring the alarm bell for the next four or eight years ... and gun manufacturers will reap the benefits.

Armageddon Index Crushed, but an Improved Outlook

Consumer Confidence hit another low in December:

The Conference Board Consumer Confidence Index™, which had increased moderately in November, declined to a new all-time low in December. The Index now stands at 38.0 (1985=100), down from 44.7 in November.

Below is as a chart of EconomPic's 'Armageddon Index' (details here) for December. As can be seen, consumer confidence was crushed in December for current business conditions and labor markets, but those surveyed are more optimistic (on a relative basis) in their outlook than in October.

Armageddon Trade of the Day (10/2)

Before we dive into another installment of Armageddon Trade of the Day, I need to say thanks to someone... my good friend Dom, who for years has predicted the end of the world. Without his negativity towards society's greed and corruption, none of this would be possible.

Okay… back to another Armageddon Relative Value Trade, which was derived from something EconomPic Data reader Scott so eloquently detailed regarding the danger of relying too much on hunting for food (as civilization screeches to a halt):

There aren't enough animals to hunt in North America to make much of a difference. Any sane model of food-supply breakdown, and the populace turning to hunting, takes game animal populations to near zero very, very quickly.

Which doesn't make it a bad trade, it's a good trade predicated on people rushing to an obvious but bad plan.

Great point Scott. In fact, this details not only the limitation of hunting for your own food, but also the struggles livestock corporations will face when they are swarmed by hungry scavengers day two... three tops. Thus, my short of the day is… iPath DG AIG Livestock ETF (humorous symbol COW... but there is nothing funny about the world coming to an end).

For my long, lets just do the reverse. What we’ll all need is our own source of sustainable food on an individual basis. How does this sound?

AeroGrow International, Inc. engages in the development, marketing, and distribution of indoor aeroponic garden systems for gardening, cooking and small kitchen appliance, healthy eating, and home and office decor markets worldwide. The company offers indoor gardens and proprietary seed kits that allow consumers to grow vegetables, such as cherry tomatoes, chili peppers, and salad greens; various fresh herbs, including cilantro, chives, basil, dill, oregano, and mint; and flowers comprising petunias, roses, snapdragons, pink geraniums, and phlox.

Mmmmm.... cherry tomatoes and chili pepper salad. The world can not end soon enough.

Armageddon Trade of the Day (10/1/08)

Back by popular demand, we present our Armageddon Trade of the Day (I may need to come up with a graphic for this....)

Our original trade emphasized canned food and taser guns on an absolute basis, but this time around we're getting fancy and moving to relative value trades involving a long and short (though we may not be able to short ANYTHING soon). Again... anything I'd go long are stocks that will do well, should the civilization screech to a halt, while those I'd go short... well you get the drift.

And the Armageddon Trade of the Day is.... Long Paper (hey we need to keep track of food rations somehow) / Short Computers (rule #1 when the world screeches to a halt... there is no electricity).

Btw- my original post was picked up by Prospect and Reason and some great suggestions include cheap booze, ammo, cigarettes, and my personal favorite... cat food. However, the best analysis comes from Joshua Corning who compares the advantage of hunting rifles over M-16's...

M-16 is an elegant high maintenance weapon that requires way to much in overhead. In the long run deer hunting rifles have an advantage.

One day, EconomPic Data too will have a funny message board (Jake slowly wipes tear from eye)...