♠ Posted by Emmanuel in Credit Crisis,Marketing
at 8/09/2009 10:26:00 AM
As if we needed another reason to limit firearm sales to the general population, here comes yet another story that defies belief. As an introduction to the scene of the crime, let me say that I have been to Houston, Texas for an extended period of time. In many ways, Houston reminds me of Birmingham here in the UK. Both are industrial towns lacking in physical beauty lurking in the shadows of more glamorous towns. In the case of Houston, my initial impression after first landing at George Bush International remains the same: it's endless highways, strip malls, office space, and McMansions followed by...well, endless highways, strip malls, office space, and McMansions (I love cut and paste).
Like with Birmingham, however, appearances can be deceiving as Houston has many things going for it. Recently, the Economist ran a feature on the future of America, comparing the faded Sunset Boulevard glamour of California with the rugged and ragged dynamism of Texas--particularly Houston. However, Houston's advantages need to be balanced out against pernicious pathologies reminiscent of true Americana. For three straight years, Houston was dubbed by Men's Health as the "Fattest City in America." Also, Harris County which encompasses Houston is notorious for being the death penalty capital of the United States. Mix these two things together--outsized waistlines and capital punishment--and you come up with a story like this from the Houston Chronicle no Hollywood script writer could come up with:An obese inmate in Texas has been charged after officials learned he had a gun hidden under flabs of his own flesh. Twenty-five-year-old George Vera was charged with possession of a firearm in a correctional facility after he told a guard at the Harris County Jail about the unloaded 9mm pistol. The Houston Chronicle reported Thursday that Vera was originally arrested on charges of selling illegal copies of compact discs.Amazing but true. Sometime ago, I commented on a Reuters blog post whose main idea was to buy US gun stocks for Yanks enjoy shooting each other--never more so than during a prolonged recession. Since then, there have been additional high-profile incidents that are so typically American: marketing professor George Zinkhan (who once taught at Houston, naturally) sent his wife and her associates in a theater group into the realm of otherworldly performance before kevorking himself. Meanwhile, nutcase George Sodini unleashed pent-up anger at women by opening fire at a health club. George Vera, George Bush, George Zinkhan, George Sodini...what is it about guys named George and guns, anyway?
The 500-pound man was searched during his arrest and again at a city jail and the county jail, but officers never found the weapon in his rolls of skin. Vera admitted having the gun during a shower break at the county jail.
By now you're likely to complain, "these episodes of spectacular violence are few and far between and do not necessarily reflect trends in firearm violence in America." I'd agree with you (by the way, is your name "George"?) However, the thing I am most interested in is how recession impacts firearm sales. There is such a thing called availability bias that tends to make persons believe that media hyped events have outsized importance in their daily affairs. In this case, the natural response is a self-perpetuating cycle: Crazies--especially those with no previous criminal history--can easily buy guns when they intend to leave this world in a blaze of glory, howsoever defined. In turn, sane-minded people believe they can better guard themselves against loonies running around by packing heat, too. Especially during difficult times, some of those who bought guns for self-defense snap, compelling them to exact revenge on an unfair world and so on and so forth.
Naturally, there is a media hysteria about gun sales going through the roof in response [1, 2, 3, 4]. While outstanding fears of Barack "Cling to Guns" Obama passing tighter gun control laws is an oft-touted reason--something I think is quite useless if there is no way to reduce the amount of firearms in circulation already--it is hard to disentangle what proportion of guns is being bought for self-defense and for recreation (I mean hunting, not shooting Americans for the heck of it a la Georges). Nevertheless, it's worth a try. To be more objective, I've done a bit more research. Below is an MSN chart indicating the relative performance of America's two largest makers of handguns, Smith & Wesson (SWHC) and Ruger (RGR) compared to the S&P 500 index since the implosion of Lehman Brothers on September 15, 2009:
Yes, they have done better than the S&P, but not by leaps and bounds as the media reports would have you believe. However, this latest incident has rather grotesque dimensions for the future of marketing firearms. For those sharing George Vera's physique, the "Blubber Holster" can be used for bodily concealment among those 400 pounds and up, etc. The possibilities are endless of fueling the fear which drives gun sales. Isn't the Second Amendment grand? For the US, I guess anything that creates business during a recession--however objectionable the consequences--is welcome.Retuning to the original question: are firearms stocks a good buy? Show me their marketing plans first. If they hired George Vera as a consultant for firearm transport, for instance, I'd be more convinced. Only in America, baby, only in America.
