Why you should hold guns

The US gun industry is worth $2bn a year which undoubtedly represents a potential investment opportunity - if you're comfortable investing in the sector. Eoin Gleeson picks a stock with a strong position in the firearms sector.

One of the most bizarre responses to the massacre on the Virginia Tech campus two months ago came from local gun-shop owner John Markell. Asked if this kind of tragedy warranted tighter gun control in the US, he replied that the problem was that there weren't enough guns. If the other students had been allowed to carry firearms, he reasoned, it wouldn't have become a massacre in the first place. Twisted logic, perhaps, but the notion that "an armed society is a polite society" has helped make the gun trade a $2bn industry in US. Regardless of your take on the morality of the country's gun laws, as long as guns remain what The Economist describes as "part of the national religion", Americans will continue to snap up the three million guns the country produces each year. If that's something you feel comfortable with, then it undoubtedly represents a potential investment opportunity.

The US gun industry is worth $2bn a year, with the $1.1bn hunting rifle and long arms industry roughly twice the size of the retail handgun market. Yet despite the nation's enduring love of weaponry, US gun makers have struggled in recent years. Sales of firearms have slowed over the last decade at America's two major manufacturers, Smith & Wesson and Sturm, Ruger & Co, even though the latest figures available from the US Department of the Treasury show overall gun sales up 2.6% in 2005.

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Eoin came to MoneyWeek in 2006 having graduated with a MLitt in economics from Trinity College, Dublin. He taught economic history for two years at Trinity, while researching a thesis on how herd behaviour destroys financial markets.