The Top 5 April Fool's Day Hoaxes

#1: The "Investors Can Beat the Market" Hoax

In the late 1920s, investors were lured into thinking that there was easy money to be made by speculating on stock market prices. The brokerage firms of the day pulled off the world's number one hoax by suggesting that investors could predict the next news story that would move stock market prices. In 1927 investors were in a gambling frenzy, with the market up 37%. It went up another 43% in 1928. But in next 3 years investors were handed their head. From 1929 to 1931, the market fell by 8%, 25% and 43% in three nightmarish years, sinking our great country into a deep depression. The lure of quick riskless riches cost millions of investors everything they owned. They were essentially "fooled by market randomness."

Investors thought that they could predict the future prices of stocks rather than recognizing that news is random and therefore the price changes are random.


It was so bad for the investors that one journalist turned stock broker wrote a book titled, "Where are the Customers' Yachts?" Many brokerages firms made fortunes from these gambling investors. If someone had just explained to the public that speculation does not have a positive expected return, the debacle may have been avoided. Once people know that risk is the source of return, they are more cautious and less likely to want large doses of it.

This "investors can beat the market" hoax has been allowed to continue through many market cycles, leaving many many investors in ruins and the average investor making very little, if any, money after taxes and inflation. The most recent occurrence being the dot com bomb, where most NASDAQ investors suffered huge losses.

However, on April 1, this cruel joke will finally be exposed to the public and stock brokers, mutual fund managers and day-trading investors everywhere will grab their computer monitors (hopefully those old bulky ones), run to their windows and scream, 'I'm as mad as hell and I'm not going to take this anymore! (see Network - 1976) "On this day, the investors will be freed from their prediction addictions because journalist throughout the world will write eloquent stories that will tell them these simple points.

1. There is no way that they can consistently predict the unknowable sequence of random events that will move stock prices, that being the news of the future.

2. Over periods of ten years or more, only about 3% of active fund managers will beat the market, or a simple market index fund.

3. The only reliable source of more returns for investors is more risk, not more speculation.

4. Investing in capitalism is a very wise investment that has paid an annualized average return of 9.45%/year from 1928 to Feb. 2011 for a simulated S&P 500.

5. Despite the fact that speculation does not work, there is a hoax-buster that will allow investors to capture the returns of the market.

6. The antidote to this "beat the market" hoax is to buy-and-hold a tax efficient, small value tilted, and risk-appropriate portfolio of index funds.

#2: The "Taco Liberty Bell" Hoax

Taco Liberty BellThere was nothing ordinary about Taco Bell’s media blitz on April 1, 1996. Over 650 print and 400 Broadcast media outlets featured the wired news that Taco Bell bought the Liberty Bell. Even Tom Brokaw on NBC’s “Nightly News,” “The Today Show,” and CBS’ “This Morning” covered the supposed event. A second wire release later that day announced it was a hoax. White House spokesperson Mike McCurry addressed the news by adding they would sell the Lincoln Memorial to the Ford Motor Co, and rename it the Lincoln-Mercury Memorial.

#3: The "Swiss Spaghetti Harvest" Hoax


spaghetti harvest On April Fools Day, 1957, the British Broadcasting Corporation (BBC) program, “Panorama,” presented a documentary hoax about spaghetti crops in Switzerland. Richard Dimbleby, a distinguished broadcaster, narrated the feature about a family from Ticino, Switzerland. During the presentation, a film showed women pulling spaghetti stands carefully from spaghetti trees, then laying them out in the sun to dry.

Some viewers were upset over the nature of the feature, but hundreds of others intrigued by the report, called in asking how they can acquire spaghetti trees to plant for themselves.

Many viewers believed the hoax because a respected and otherwise serious program presented it. In similar manner, Wall Street proponents of active management, respected by investors, encourage active investing that is financially hazardous to investor's wealth.
#4: The "Sidd Finch" Hoax

Sidd FinchDid he or didn’t he pitch a ball clocked at the unbelievable speed of 168 mph? (Fastest time to date is purported at 103 mph by Goose Gossage and Nolan Ryan in 1978, though the Guinness Book of World Records lists Nolan Ryan as officially clocked at 100.9 mph in 1974.) Wrought in deliberate secrecy, only a chosen few Mets were allowed to watch and tryout with the young eccentric Finch, quite literally behind canvas where other team members couldn’t watch. The Mets waited to see if Finch would join their team or not. Nevertheless, as reported by Sports Illustrated, April 8, 1985, Mr. Finch made his official announcement that his once perfect pitch suddenly turned into “Chaos and Cruelty,” and abruptly walked away, not to he heard from again in the field of baseball. What really happened? Sports Illustrated published an article by George Plimpton for its April 1, 1985 edition entitled “The Curious Case of Sidd Finch,” from which the above account is derived. The subtitle reads “He's a pitcher, part yogi and part recluse. Impressively liberated from our opulent life-style, Sidd's deciding about yoga -- and his future in baseball.” Check it out yourself, the first letters of each word in the subtitle reads: “HAPPY APRILS FOOLS DAY.”
   
#5: Space Shuttle Lands in San Diego

While the Discovery Space Shuttle sat on the ground in 1993, Dave Rickards, deejay for KGB-FM, San Diego , announced Discovery was diverted from Edwards Air Force Base and would be landing at Montgomery Field. The residential area surrounding the small military airport turned into an immediate traffic jam. Apparently, about 1,000 people showed up. Police were called in to help. Turned out that Montgomery Field is too small for the shuttle to begin with. The police were not too excited about the hoax. They announced they would bill the radio station for the costs of directing the traffic. The station responded by apologizing, but after all, it was April Fool's.

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