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.
He further announced that he would now buy at $20 for a monkey.
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 small that it was an effort to
even find 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 all their savings and bought all the monkeys.
They never saw the man nor his assistant again, only monkeys everywhere!
Now you have a better understanding of how the stock market works.
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.
He further announced that he would now buy at $20 for a monkey.
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 small that it was an effort to
even find 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 all their savings and bought all the monkeys.
They never saw the man nor his assistant again, only monkeys everywhere!
Now you have a better understanding of how the stock market works.