In case you missed it, President Obama’s tear-jerking speech on Tuesday touched not only on the tragic level of gun violence that continues to plague this country but also the components of his upcoming executive order.

Before we get any further, let me say that I completely understand the desire to own a firearm.

I come from a family of recreational hunters (although I refuse to wear camo of any sort).

I have a few firearms registered to my name, and spending time at the local gun range falls among my favorite pastimes.

I also reside in Maryland, where background checks and certified safety courses are just a few of the basic requirements for the purchase or transfer of firearms.  

A national study from 2012 showed that 91% of respondents supported background checks like the ones we perform in Maryland (and elsewhere).

Of existing gun owners, 85% supported criminal background checks, regardless of the seller or venue.

And why wouldn’t we? In the past decade alone, more than 100,000 lives have been lost to gun violence. It seems logical to practice at least the most basic prevention methods when it comes to keeping a gun out of the “wrong person’s” hands.

Let’s put it this way: This country is only seven days into the new year, and 147 people have already been killed using guns. One of those was a two-year-old girl who was victim to a murder-suicide in Los Angeles.

In one week, this country has experienced more gun deaths than most other countries experience in an entire year.

Gun Culture

Still, Americans just love guns. Firearms have always been a part of this country’s identity and culture, starting with the Second Amendment and the Wild West — the American individualistic stubbornness, the “warrior on the frontier” mentality.

Despite all the statistics that should convince you to not go through with the purchase, over 300 million firearms are privately owned in this country.

In other words, there are more guns in this country than there are adults.

For every gun you don’t own, someone out there owns two… or three. Or more.

In some states, you can buy a gun at Wal-Mart. In all states, you can purchase a gun — with no waiting period and no background check — from a private seller. (These types of sales account for two out of five guns purchased in the U.S.)

We have the most guns of any country on Earth.

Ranked a distant second to the United States is Yemen, a country torn apart by civil war and surrounding militant conflicts.

(I’ll stop now, but I could keep listing statistics forever.)

At the risk of diminishing American culture, I find it to be a fairly morbid reality that guns maintain their iconic position, even as parents bury their elementary-aged children in Connecticut and an almost 200-year-old church in South Carolina becomes the site of a massacre by a single man with a .45 caliber handgun.  

Obama Wins “Salesman of the Year”

As the entire nation grieves with the victims of these heinous crimes, we Americans are reactively buying more guns.

In 2012, after the Aurora movie theater shooting in Colorado, movie theater stocks suffered while the only two publicly traded gun manufacturers, Smith & Wesson (NASDAQ: SWHC) and Sturm, Ruger & Co. (NYSE: RGR), outperformed the broader market.

The tragedy at Sandy Hook Elementary School was immediately followed by a national shortage of guns. Smith & Wesson profits increased 75%, soaring past the S&P 500, which was only ahead 37%.

At the risk of suggesting a “surefire” investing strategy, the same trend happened again this week, almost immediately after the President’s statement on Tuesday. (Obama might just be the best stock-picker of all time.)

“President Obama has single-handedly done more to promote gun ownership than anyone else.”

— Erich Pratt, executive director of the Gun Owners of America.

Shares of Smith & Wesson (SWHC) jumped 11% to nearly $26.00. Sturm, Ruger & Co. (RGR) also saw a 7% boost to $65.54.

Why? Because each massacre spurs conversation about reformed gun laws and enacting stricter policy regarding the possession and carrying of loaded firearms. Americans fear for their Second Amendment rights and therefore try to buy up all of the wares before they become restricted.

This sort of reaction translates to dramatically increased revenues for both Smith & Wesson and Sturm Ruger, up 150% and 370% respectively over the past five years.

Whatever your stance on gun control legislation, it’s impossible to ignore the potential for profit from the tumultuous policy debate. Each time the public foresees a tightening of firearm availability, manufacturers see profits.

Regardless, it’s clear that firearm stock, like so many others, is intrinsically linked to the political temperature.

As long as gun control legislation remains a hot-button issue for policymakers, it’s open season for investors.

If it soothes your moral compass, it’s important to know that the increases in firearm manufacturer stock value is not exclusively linked to violent tragedies.

Upon Obama’s re-election, demand for firearms increased as citizens speculated that the liberal administration, which tends to be anti-gun, would crack down on purchasing requirements.

There is one major component of Obama’s executive order, and that is to close the “gun show loophole,” which allows for some firearm purchases without a background check.

The “gun show loophole” is labeled as such because those shows are notorious for hosting private sales — the ones that don’t require a background check. But gun shows aren’t the only place where buyers can bypass that regulation. Internet sales, sales between friends, or sales through individual collectors are all other ways that background checks can be avoided.

The only significant changes that President Obama is making involve placing limitations on who can sell firearms without a federal license, therefore increasing the prevalence of background checks as part of a firearm transaction.

Criminal background checks will not impact your ability to purchase a firearm in any way, shape, or form. (Unless you are a criminal.)

Like I mentioned earlier, more than 80% of gun owners (and more than 90% of Americans) support criminal background checks. That’s why I’m a little confused by Obama’s opponents, who call his ideas “extremist.”

The Executive Order also includes providing more resources to the ATF to modernize the background-check system, research gun safety technology, and improve mental-health treatment and training.

On Tuesday, the President himself said, “I believe in the Second Amendment, there written on paper, that guarantees the right to bear arms… No matter how many times people try to twist my words around, I taught constitutional law. I know a little bit about this. But I also believe that we can find ways to reduce gun violence consistent with the Second Amendment.”

Let’s clarify some very basic points here before we all go on a rampage cursing the President’s name.

1. No one is taking away your right to gun ownership.

Actually, I guess that’s it. So keep calm, and continue (safely and legally) owning firearms.

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