Bad example, perhaps, some will say that the difference is "doughnuts don't kill people, but guns do." But the point is clear; at least I hope it is.
Indeed, after the Newtown, Conn., tragedy, companies associated with guns saw their stocks fall precipitously.
(CAB - Get Report) shares fell about 20% between the beginning and middle of December, but have since risen 40%, and are once again near all-time highs.
The story is similar with
Dicks Sporting Goods
(DKS). Gun manufacturers, not surprisingly, were hit harder.
(RGR) shares fell about 33%, and have since gained back much of that ground.
Smith & Wesson
(SWHC - Get Report) shares fell nearly 30% and have since risen 27%.
DKS data by
Institutional investor reactions are all over the map. The California State Teachers Retirement System reported in January that it would divest itself of the $2.9 million worth of Sturm Ruger and Smith & Wesson that were part of index fund holdings. But yesterday, New York City's police pension announced that it is hanging on to the nearly $10 million it has invested in ammunition manufacturers
. That's one of the beauties of our system; private and institutional investors can vote through purchase or divestment.
It's an emotional issue, no doubt, and one where opinions on either side are very strong. But there's also a lesson in economics, and of supply and demand embedded within, and it has universal application in a free society. If you want to create a stir, a frenzy among the citizenry, threaten to take something away. That may be obvious but it's yet another example of the fact that there are a whole bunch of folks in Washington who don't have a clue about economics.
At the time of publication the author held long positions in KKD.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.