How does the stock market work?

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 effort. The man further announced that he would now buy at $20. 

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 their farms. The offer increased to $25 each and the supply 
of monkeys 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 
would now buy on behalf of him
In the absence of the man, 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 to him for $50 each.”

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.

Blogged with Flock


4 Responses

  1. The moral of the story….don’t buy monkeys? lol
    No really, that’s a perfect analogy.

  2. lol

    Nice, really nice. 😀 So that’s why there are a lot of frenetic monkeys in Wall Street? 😀

    Seriously though, has anybody ever thought about playing in the stock market?

  3. That’s funny!

  4. Nice lesson! 😛 I have a friend (parent of my students) who works at Wall Street, I’ll send this to him and ask if stock market works this way. hehe.

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