Tuesday, October 07, 2008

Teaching effectively stock markets

Once upon a time in a place overrun with monkeys, 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, they became harder to catch, so the villagers
stopped their effort.

The man then announced that he would now pay $20 for
each one. This renewed the efforts of the villagers and
they started catching monkeys again. But soon the supply
diminished even further and they were ever harder to
catch, so people started going back to their farms and forgot
about monkey catching.

The man increased his price to $25 each and the supply
of monkeys became so sparse that it was an effort to even
see a monkey, much less catch one.

The man now announced that he would buy monkeys for
$50! However, since he had to go to the city on some
business, his assistant would now buy on his behalf. While
the man was away the assistant told the villagers: "Look
at all these monkeys in the big cage that the man has bought.
I will sell them to you at $35 each and when the man
returns from the city, you can sell them to him for $50

The villagers rounded up all their savings and bought all the monkeys.
However, they never saw the man nor his assistant again and once again there
were monkeys everywhere.
Now you have a better understanding of how the stock
market works!


Fede said...

Couldn't have put it better! :o)

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