The April Fools Day rally

fool.bmpThere is an extraordinary main feature in this week’s Barron’s, the leading US investment magazine.

This analyses the dramatic 391 point rally in the Dow Jones Industrials Index on 1 April. It describes this as ‘a spectacular exercise in the absurd’, and claims that the root cause was an April Fools spoof sent out that morning by a very prominent bearish commentator.

Doug Kass (known as the Bear who Never Sleeps) sent out an April Fools note in which he suggested the Dow would soon hit 56,000, after a 26% rise in 2008. He also joked that foreign buyers would now rush to buy up foreclosed US properties, oil prices were about to fall 50%, and that there would be no US recession. Barron’s claims that these views were picked up by many foreign news media (who probably did not understand the April Fools concept), as well as hundreds of ‘investment websites’.

Was this really the cause of the rally? Who knows? But for Barron’s to write about it so prominently suggests that they are convinced.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.


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