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Reader TT writes:

University of Maryland “researchers” — and I use that term loosely — use a false assumption that a drop in stock prices must be due to the stock market’s belief that gun control is coming.  They define mass shooting as four or more deaths.  In addition (or more conveniently for their “study”) they only track stock prices in the short term after these shootings.  The intervals used were 2, 5, 10 and 30 days after each shooting. They claim stock price declines any time after that could not be directly attributed to the mass shooting. The stock prices tracked are Ruger and Smith & Wesson . . .

The impression you get is from this article that these firms are failing. The truth about gun stocks (see what I did there?) is that after the first 30 days or so after Newtown, Smith & Wesson’s stock skyrocketed. Even after a correction in the second half of 2014. The stock never dropped to the price level when Newtown occured and has climbed once again.
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Ruger’s stock shows a similar climb although it did drop below the price level of Newtown during the 2014 correction. Ruger’s stock is currently trading 27% higher than the low immediately following the Newtown shooting.

Apparently Wall Street doesn’t think gun control is coming, even if the researchers do.

18 Responses to U of Maryland Researchers Think They See Gun Control in Stock Prices

  1. I work “on The Street” and I can tell you this “study” is flawed in too many ways. Rampage killings are immediately followed by drops in these equities because some investors don’t want to hold onto controversial stocks and sell. Others think the future sales will lag and “short” the stocks. Still others believe that further rights-restrictions are inevitable and that will have a chilling effect on sales and thus earnings.

    Except, after every rampage killing (or violent riots) gun sales increase revenues and eventually drive higher earnings for the makers. Since the stock prices have declined and the prospect for future earningss has increased, the stocks look attractive on a price-to-earnings basis, particularly forward earnings.

    Stock prices price based on earnings expectations 6-12 months in the future. If prices decline following a rampage and knee-jerk sales spike, the stocks look “cheaper” (lower price to forward earnings ratio) than they did prior to the rampage.

    When the post-Sandy Hook buying spree came to an end and sales slowed, the stocks retreated because investors assumed future earnings would lag after the panic-induced spike. The market does not care one wit about gun control, it cares about valuations and the forward looking prospects.

    Last thing, since the Lanza rampage, many states have adopted laws that INCREASE the odds of increasing gun ownership. If I had to guess, those laws that could increase sales might be as strong as the anti-rights laws passed in NY, NJ, CT, MD, CA and Colorado. In fact, they might wash out in respect to future sales.

    Those researchers wanted a certain outcome and created an argument for it, IMLTHO.

    • I was about to post the exact same thing as soon as i read though this article. this has to be one of the most flawed “studies” I have ever seen

  2. And I see lots of steaming crap in that academic BS paper. It’s a laugh, written by academic losers who avoid the real world and accountability.

    • It was an article with a link to the study. Google “Stock Market’s View of Gun Control: It’s Coming”

  3. These people will see gun control (confiscation) in anything. They are loosing the argument, so they will do/say anything to try and take back the win. Just my 2 cents worth.

  4. University of Maryland “researchers” — and I use that term loosely —. See, this is just another example of the Science of Soviet Socialism of which I speak. A science I say!

  5. I believe TTAG is where I was introduced to this site…Spurious Correllations.

    http://www.tylervigen.com

    Among the things that are likely to get a critical reception from me are: an academic study proves…, a lobbyist saying things are “on track”, and an intel officer who says to expect little to no resistance…

  6. Did these University of Maryland geniuses also predict the triumph of the Labor Party in the British elections?

    • In British (insert snobby accent here) it’s Labour, not Labor.

      Come to think of it, that might explain the unexpected whipping they took — that darn American spelling split off some of the Labour vote, giving the Tories a bigger than expected margin.

  7. How about stock prices tied to RIOTS? Or really awful weather …or a criminal attorney general? If I had MORE $ I would buy more guns…wait ’till the weather gets really hot or the next NEXT po-leece atrocity.

  8. I only consider investigating these kinds of predictions after the “analysts” bet their own money on their own predictions. If someone was confident in their Wall Street predictions, they would be throwing their entire portfolio at those predictions.

  9. Everyone is an expert on the Internet. These comments are proof of that. Y’all don’t know shit about shit.

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