Monday, June 30, 2008

Ruger - RGR and Smith & Wesson - SWHC

Some of you may have been following with interest the recent Supreme court decision regarding the 2nd amendment, the right to keep and bear arms. Not withstanding your agreement or disagreement with the 5-4 decision in favour, it got me to thinking about the firearm stocks. The 2 I follow are Ruger ticker RGR and Smith & Wesson ticker SWHC.

The chart of Ruger (above) shows a long slow grind lower. Can you spell frustration, I bet the RGR longs sure can. The fact that a major unknown is now a known some of that may dissipate. I am prepared to take a punt here on 1 unit long of Ruger here at $7.10 as a decent risk reward position. I will place my stop at $6.72 I should think a firearm manufacturer could prosper in a bear market. Crime tends to rise as the economy weakens and people now have their right to protect themselves re-affirmed.

Likewise with Smith & Wesson (above), looks to have bounced ahead of Ruger and is now correcting that move. I am taking a punt on 1 unit long of SWHC here at $5.25 with a stop at $4.73

There 2 trades are not official positions in "the portfolio" but I am enamoured enough to throw them into my retirement account. I am in no way becoming an investor for as regular readers know all too well, anyone involved in the markets is a speculator and an investor is a speculator who made a mistake and will not admit the error of his ways and take his/her loss !!

Housekeeping notes;

Last week I indicated I was prepared to get longer the Market Vector Coal ticker KOL on a move above $57.10. Well, I was filled on a 2nd unit long of Market Vectors Coal $57.55 as the stock gapped up, opening today at $58.50. This leaves me with 2 units long of KOL now. I am also bumping my stop up to $53.37.

Good speculating to you all and always remember that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 3 units Ultrashort Dow DXD@ $50.12 stops $62.22/60.49/58.62
Long 2 units Ultrashort Financials SKF @ $103.90 stops $139.46/134.67
Long 3 units Currencyshares Swiss Franc ticker FXF @ $97.35 stop at $93.82
Long 3 units Ultrashort ReEstate ticker SRS @ $88.95 stops $99.23/97.47/92.72
Long 1 unit US Gasoline Fund ticker UGA @ $60.35 stop at $62.54
Long 1 unit Ultrashort QQQ ticker QID @ $37.05 stop at $41.91
Long 1 unit Ultrashort S&P ticker SDS @ $57.20 stop $61.57
Long 2 units Hecla Mining ticker HL @ $8.50 stop at $7.16
Long 2 units Kinross Gold ticker KGC @ $18.93 stop at $17.56
Long 2 units Market Vector Coal ticker KOL @ $56.68 stop at $53.37
Long 1 unit Contango Oil ticker MCF @ $94.00 stop at $90.07
Short 1 units Daimler AG ticker DAI @ $86.20 stop at $70.12
Short 2 units Brinker Int'al ticker EAT @ $20.07 stop at $20.68
Short 2 units Darden ticker DRI @ $36.35 stops at $35.36
Short 2 units Lehman ticker LEH @ $43.70 stop at $28.32
Short 2 units Deutsche Bank ticker DB @ $117.03 stops at $105.26/99.32
Short 1 unit of Visa ticker V @ $86.25 stop at $85.36
Short 1 unit HSBC ticker HBC @ $83.23 stop at $83.52
Short 2 units of Netflix ticker NFLX @ $30.35 stop at $32.34
Short 1 unit of IBM ticker IBM @ $122.80 stop at $127.27


m said...

For your shorts, are you selling on margin? Also, I suppose I'm still confused about what a unit is :) My guess is it's, say, a percentage of your portfolio (like 1% or something)? Thanks! M

synthetik said...

Smith and Wesson seems like a good call considering what we've got ahead of us.

I'm wondering about the P/E of 24 - isn't that pretty expensive?

Also, what if there is talk of a government gun ban. Wouldn't that crush these stocks? I guess that's why they call it speculation. ;)

I checked out Jan 2009 Calls @ 5 and 10 strikes and they are rediculously cheap imo.

Harleydog said...

I use Richard Dennis turtle trading rules for unit sizing.


Harleydog said...


I have not looked at a P/E in over 10 years. essentially since I discovered and embraced technical analysis.

I believe it is all factored into the tape. I like to buy higher highs and higher lows so this is dyslexic moment for me. That being said I do think they are worth a punt given the socioeconomic stage we are at.
Hope for the best, plan for the worst.