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. This renewed the efforts of the villagers and they started catching
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
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 he returns from the city, you can
sell them to him for $50 each.'
Realizing what a great opportunity this was... the villagers withdrew all
their savings and bought all the monkeys.
Of course they never saw the man nor his assistant again... only monkeys
Now you have a better understanding of how the stock market works.