A Man Buys Monkeys For Rs.1000. –
Once upon a time in a village,
a man appeared and announced to the villagers that he would buy monkeys for Rs.1000.
The villagers seeing that there were many monkeys around, went out to the forest and started catching them.
The man bought thousands at Rs.1000. and as supply started to diminish, the villagers stopped their effort.
He further announced that he would now buy at Rs.2000.
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 offered rate increased to Rs.2500 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 Rs.5000!
However, since he had to go to the city on some business, his assistant would now buy on his 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 Rs.3500 and when the man returns from the city, you can sell them to him for Rs.5000.”
The villagers squeezed up all their savings to buy the monkeys.
Then they never saw the man nor his assistant, only monkeys everywhere!!
And now you understand the workings of the stock market !!