Did Stocks Rally Because of an April Fool's Joke?

Why did stocks rally today? (link to snapshot) One reason, says Barry Ritholtz, is “an internet April Fool’s hoax that backfired.” I’m not so sure, but the story is a good one: Doug Kass of Seabreeze Partners is an expert short seller, a skeptical investor who is so bearish — and brave enough — that he recently bet against legendary investor Warren Buffett’s Berkshire Hathaway (BRKa). On Apr. 1, Kass sent out a note saying he’s changed his mind about it all. His short funds, designed to bet against the stock market, are going long. He initially thought stocks would decline 5% to 10% this year, but now he thinks the S&P 500 will hit 1,666, up 26% from this point. If you knew Kass’s previous market commentary, at this point you would figure out that he wasn’t serious. Even if you didn’t know Kass well, it might raise your eyebrows when Kass predicted that oil prices will fall below $50 per barrel or that financial stocks should double by year-end. Also, Kass writes, “Housing has definitely bottomed,” and “a housing shortage is possible within 12 months.” Yeah, right. The end of the note leaves no doubt that Kass is just joking. “April Fool’s Day!” he writes.

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