Once upon a time, a man appeared in a village and announced
to the villagers that he would buy monkeys for Rs.10/-. Since there were so
many monkeys around, the villagers started catching them. The man bought
hundreds of monkeys at Rs.10/- each, and kept them in a huge cage for all to
see. As supply started to diminish, it became a bit difficult to get new
monkeys and the villagers stopped their efforts.
The man now announced that he would buy monkeys at Rs.20/- per
monkey. The villagers now renewed their efforts and started catching monkeys
again. Soon, the supply diminished even further and people started going back
to their farms. The offer rate now increased to Rs.25/- and the supply of
monkeys reduced even further. The man now announced that he would buy monkeys
at Rs.50/- ! However, he had to go to the city on some business, and would
return after a couple of days. Till then, his assistant would look after the
monkeys kept in that cage. When the man was gone, the assistant told the
villagers – “Look at all these monkeys in the cage that the man has collected.
I will sell them to you at Rs.35/- each and when the man returns from the city,
you can sell it to him for Rs.50/-.” The villagers liked the idea, and squeezed
up all their savings and bought the monkeys back. Then, then the assistant too left
with all the money and never returned.
Welcome to the Stock Market.
