Why You Shouldn’t Buy Gun Stocks Before November

In the aftermath of the recent assassination attempt on former President Donald Trump, investors have renewed their interest in gun stocks. And if you’re one of them, I’m here to share some historical evidence that says you shouldn’t buy gun stocks now if you think Trump is going to win.

Because the prices for gun stocks have surged since that fateful day. But historical evidence suggests that if Trump takes the White House, gun stocks will suffer a massive sell-off. And that’s when you should pick them up, when those gun stocks all go on sale…

Gun Stocks Are Weird

I know it might seem counterintuitive to say that a Trump victory will be bad for gun stocks. But history supports the statement. Despite the Republican Party being known for its strong stance on the Second Amendment, they’re terrible for investors in gun stocks. You’d think that gun stocks would run up the charts with a Republican White House. It’s bullish for the industry when people who are proponents of said industry get into power. But that’s where gun stocks act differently from other stocks. Other stocks would rise in anticipation of more sales coming down the pipeline. But gun stocks tend to fall. And if you don’t believe me, just take a look at the performance of these two gun stocks after Trump beat Hillary Clinton in 2016:

• Smith & Wesson (NASDAQ: SWBI) fell more than 17%
  
  
• Sturm, Ruger & Company (NYSE: RGR) fell more than 15%

Why Do Gun Stocks Fall When Republicans Win?

Before the election results were in back in 2016, gun stocks were going on a tear. But this wasn’t because the market expected Trump to take the White House. It was reflecting the odds that we were going to have our first female president and that Hillary Clinton would win. But as soon as news broke that she’d conceded and Trump would be the next president, the biggest gun stocks took a nosedive. Because nobody celebrates a Republican win by going out and picking up a bunch of guns.

You see, when a pro-gun party is in power, there’s no urgency to go out and buy guns. Nobody thinks they’re going to be taken away anytime soon. So what’s the rush? And that impacts the quarterly sales of the companies that sell guns. Which is why, when Republicans win, you often see gun stocks fall. And that’s why I say gun stocks are weird.

Democrats Are Good for Gun Stocks

Now, I’m sure that heading might rattle some readers. I mean, the Democrats are the ones some people fear want to take all private gun ownership away. So if they’re in power, it’s probably not a good sign for the gun industry. But, while that may be true, it’s the absolute best time to be the owner of gun stocks. And it’s because Democrats typically favor stronger restrictions on gun ownership that they’re so good for gun stocks.

When anti-Second Amendment politicians take power, the fear of losing the right to purchase firearms sweeps certain communities. And inevitably, the sales of guns go up as people “stockpile” just in case they’re not able to buy them later. That surge in sales triggers a run-up in the price of gun stocks. And investors who recognize the pattern get rewarded. So, while it might sound crazy to say, Democrats are good for gun stocks.

Wait Until November to Buy Gun Stocks

And it’s for those reasons that I say you should wait until November to buy gun stocks. That goes double if you think Trump is going to win. Because when a pro-gun politician is in the White House, gun sales suffer. And when gun sales suffer, gun stocks get cheaper. So if you want to make a profit from gun stocks and you think Trump is going to win this election, you should wait until gun stocks fall in November.

Because if the polls are right and the next president is a Republican, history says gun stocks are going to take a dive. You might even be able to get another double-digit discount. And then you can ride that back up the charts as sales normalize and prices come back to normal. Just remember, whether it’s gun stocks or any other stocks, the way to make money is to buy low and sell high. That’s the simple formula that our investors use to create legacies everyday.