Sunday, 9 August 2015

What is Monkey Trading ?

Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for Rs100.
The villagers started catching the monkeys.
The man bought thousands of monkeys at Rs100 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at Rs200. 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 Rs250 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!
The man now announced that he would buy monkeys at Rs500! 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 Rs350 and when the man returns from the city, you can sell it to him for Rs500."
The villagers squeezed up with all their savings and bought all the monkeys.
Then they never saw the man nor his assistant, only monkeys everywhere!!!
Welcome to the "Stock" Market !!!!
 
Credits - SFM Praveen ( CA Final SFM Faculty)

4 comments:

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