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How the Stock Market works
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 then announced that he would now buy at $20 each. 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
little that it was an effort to even see a monkey, let alone catch
one!
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 his
behalf.
In his absence, the assistant told the villagers, 'Look at all the 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.'
The villagers rounded up with all their savings and bought all the monkeys.
Then they never saw the man nor his assistant ever again; only monkeys
everywhere!
You now have a better understanding of how the Stock Market works.
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