Once upon a time in a village, a man appeared and announced to thevillagers that he would buy monkeys for £10 each.
The villagers seeing that there were many monkeys around, went out tothe forest, and started catching them.
The man bought thousands at £10 and as supply started to diminish, thevillagers stopped their effort. He further announced that he would nowbuy at £20. This renewed the efforts of the villagers and they startedcatching monkeys again.
Soon the supply diminished even further and people started going backto their farms. The offer increased to £25 each and the supply ofmonkeys became so little 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 wouldnow buy on behalf of him.
In the absence of the man, the assistant told the villagers. "Look atall these monkeys in the big cage that the man has collected. I willsell them to you at £35 and when the man returns from the city, youcan sell them to him for £50 each."
The villagers rounded up with all their savings and bought all themonkeys.
Then they never saw the man nor his assistant, only monkeys
everywhere! (scroll down)
Now you have a better understanding of how the stock market works.
The villagers seeing that there were many monkeys around, went out tothe forest, and started catching them.
The man bought thousands at £10 and as supply started to diminish, thevillagers stopped their effort. He further announced that he would nowbuy at £20. This renewed the efforts of the villagers and they startedcatching monkeys again.
Soon the supply diminished even further and people started going backto their farms. The offer increased to £25 each and the supply ofmonkeys became so little 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 wouldnow buy on behalf of him.
In the absence of the man, the assistant told the villagers. "Look atall these monkeys in the big cage that the man has collected. I willsell them to you at £35 and when the man returns from the city, youcan sell them to him for £50 each."
The villagers rounded up with all their savings and bought all themonkeys.
Then they never saw the man nor his assistant, only monkeys
everywhere! (scroll down)
Now you have a better understanding of how the stock market works.
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