The Armageddon Stock Strategy Wins

Last month, to teach Neil a bit about the stock market and to watch its current trends ourselves, Peter set up a stock market game for the family. To say I was pessimistic at the time may have been a bit of an understatement. I had recently seen this graph based on the Congressional Budget Office’s analysis of our runaway government spending¬† (source: Washington Post, March 21, 2009)

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Economists were already sounding the alarm about the consequences of our expansive debt as created under G.W. Bush and 110th Congress. And then along comes President Obama and the 111th Congress and the deficit quadruples! It’s like happy happy lenderman all over again, except with government largesse instead of houses. Holy freakin’ Weimar Republic, Batman! I could use a little less stimulation, and a lot more financial prudence!

I had no idea what stocks to buy, given that in my opinion, everything would soon be worthless. I didn’t plan to play the game too hard, so when Peter reminded me I needed to pick some stocks, I (as Peter would say) took a piss, and put it into guns, missiles, gasoline, and gold, leaving some soon-to-be-not-so-hard currency aside for bribes, canned goods, or financing a quick getaway. Besides straight gold, I bought stock in Smith and Wesson, Ruger, Anadarko Petroleum, and Textron (a manufacturer of guided missile systems.)

Peter was more serious and put his virtual money into companies he believed had good fundamentals and a solid business model for our current economy. He bought Amazon, since it’s clear people are trying to avoid the higher sales taxes being levvied. I mean, at this point, we’ve already bought shampoo and food via Amazon, so we know its model and like it. And he bought American Airlines, which was (in Peter’s opinion) undervalued.

Neil was interested in technology, particularly green technology. He bought stock in Oilsands Quest, which extracts oil from shale; and believing it was an environmental science company, Perma-Fix Environmental. It turns out Perma-Fix specializes in disposing of nuclear waste, but they were also the big gainer in Neil’s portfolio.

Here’s the final results, though they may be hard to read. In short, I won with $1,273.58 gain over the course of them month, leaving behind Neil whose stocks went up by $1055.53; Peter, who earned $769.02; and Kelly, whose cash in a money market fund only went up by $7.28.

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The stock market is tells you what investors know and are thinking, and that isn’t always in the direction the news stories of the day are going. Despite the fundamentals of Amazon, Oilsands, and American Airlines, these stocks did just ok. Gold remained steady, though you’d expect it to appreciate in the context of what’s being done to the value of the U.S. dollar. Gun stocks did pretty well; though reportedly they had their real run-up shortly after the election.

The stocks that were real winners were Textron (missile defense) and Perma-Fix Environmetal (nuclear waste disposal.) That’s even more Armaggeddon than I’d been thinking, though I don’t know how useful it is to own stocks in a nuclear wasteland.

The success of gasoline stocks was more understandable: as a limited, consumable commodity, the more money there is in circulation, the more money will be competing for it. My Anadarko Petroleum stocks did well for me. In fact, Peter and I moved our real stock market money out of cash and put it into real gasoline stocks based in countries which haven’t already nationalized their gasoline reserves or are in danger of nationalizing or punitively taxing their energy companies. So if (when?) gas prices climb this summer, we won’t be complaining as much, because the profits are flowing back to us, too.

So our game was entertaining and informative, and it showed us a good place to invest our real funds.¬† I also won $50 thanks to my Armageddon picks, but I’m not sure I’m all that thrilled that the real money out there is making forecasts towards an apocalypse.

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