Wednesday, October 17, 2012

Investing in Gun Manufacturers: Know the Product

One of the top pieces of advice given to investors is to know your investment. This has worked well for the likes of Warren Buffett who knew a good value when he saw one and made billions off investing in companies that produced basic, but much sought after goods. The firearms industry is manufacturing a tangible product with a very clear purpose. Ruger is one of the companies that has taken the model of a basic product and making it very profitable

The overall quality of different companies is scrutinized fairly well within the community despite some playing favorites or passing ill informed opinions. In the end, the only thing that should matter to an investor is what sales and ultimately what gets passed on to the bottom line. When it comes to selling firearms, there are many approaches a company can take, but Ruger has focused on continually developing new products at a good value. 

The video below is produced by Forbes, one of the leading financial news sources in the world, and covers the strategy of Ruger quite well. Ruger may not be the most exciting company in the world and you may not be their biggest fan, however their handguns and rifles speak for themselves in terms of popularity based on sales and profit figures. You may have seen that they had to stop taking sales earlier in the year simply to catch up on demand. We should be clear that our investments in Ruger this year have paid off quite well, but even we can't predict what the future may provide.

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