Sunday, 27 December 2009

Interesting story on "How stock market works"

An interesting analogy to explain the functioning of the stock market.

A businessmen came to a village and asked villagers to get him monkeys. He agreed to pay 10£ for every monkey. Hearing this villagers got very excited and they started looking out for monkeys. As there were plenty of monkeys in the village, they caught many and sold them to businessman. The man bought thousands at 10 and as supply started to diminish and villagers started to stop their effort he announced that now he would buy at 20 rupees.


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 rate increased to 25 and the supply of monkeys became so 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 the man. 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 comes back you can sell it to him for 50." The villagers queued up with all their saving to buy the monkeys.

After that....

there was no sighting of either that businessman or his Assistant.....but only of MONKEYS ......................:-)))

No comments:

Post a Comment

I'd really appreciate your valuable comments on the above topic. Thanks for taking time out to post.