Understanding the ‘Stock Market’
Once upon a time in a village somewhere in Asia, a man appeared and announced to the villagers that he would buy monkeys for $5 each.
The villagers seeing that there were many monkeys around, went out to the forest, and started catching them.
The man bought hundreds at $5 and put the monkeys in a big cage which he had built nearby.
As supply started to diminish, the villagers stopped their effort. So he further announced that he would now buy at $10. This renewed the efforts of the villagers and they started catching monkeys again.
Soon the supply diminished even further and people started going back to other pursuits. The offer doubled to $20 each and the supply of monkeys became so scarce that it was an effort to even see a monkey, let alone catch it!
The man then announced that he would buy monkeys at an incredibly generous $80! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.
In the absence of the man, the assistant told the villagers. “Look in the big cage over there at all the monkeys that the man has collected. I will sell them to you at $40 and when the man returns from the city, you can sell them to him for $80 each. You’ll double your investment.”
The villagers rounded up with all their savings and bought all the monkeys. Then they never saw the man, nor his assistant again, only monkeys everywhere!
Now you have a better understanding of how the ’stock market’ works.
(Tony Scott, on Crikey.com)
