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Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each. The villagers, seeing that there were many monkeys around, went out to the forest and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their efforts. So the man announced that he would now up the price and buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.
Soon the supply diminished even further so the offer increased to $25 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 now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now buy on his behalf.
In the man's absence, the assistant told the villagers. "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them back to him for $50 each."
So villagers rounded up all their savings, and bought all the monkeys from the assistant. They then sat back and waited for the man to return from the city. However, they never saw the man, nor his assistant, ever again... only monkeys everywhere!
And so my friends, you now have a better understanding of how the stock market works.
Soon the supply diminished even further so the offer increased to $25 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 now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now buy on his behalf.
In the man's absence, the assistant told the villagers. "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them back to him for $50 each."
So villagers rounded up all their savings, and bought all the monkeys from the assistant. They then sat back and waited for the man to return from the city. However, they never saw the man, nor his assistant, ever again... only monkeys everywhere!
And so my friends, you now have a better understanding of how the stock market works.
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