Heard this from one of the regulars at our Kopitiam, so just to share some laughter with all fellow retail investors….
A lot of monkeys live near a village.
One day, a merchant came to the village to buy these monkeys! He announced that he will buy the monkeys at $100 each. The villagers thought that this man is mad. They thought how would anybody buy stray monkeys at $100 each?
Still, some people caught some monkeys and gave it to this merchant and the latter gave $100 for each monkey.
The news spread like wildfire and people caught monkeys and sold it to the merchant. After a few days, the merchant announced that he will buy monkeys at $200 each.
The other lazy villagers also ran around to catch the remaining monkeys! They sold them at $200 each.
Then the merchant announced that he will buy monkeys at $500 each! The villagers started to lose sleep! They managed to catch six or seven monkeys, which was all that was left and got $500 each.
The villagers then waited anxiously for the next announcement.
Then the merchant announced that he is going home for a week. And when he returns, he will buy more monkeys at $1000 each! He asked his employee to take care of the monkeys he bought. The employee was left alone to take care of all the monkeys in a cage and the merchant went home.
The villagers were very sad as there were no more monkeys left for them to sell it at $1000 each. Then the employee told them that he will sell some monkeys at $700 each secretly.
This news spread like fire. Since the merchant buys monkey at $1000 each, there would be a $300 profit for each monkey.
The next day, villagers made a queue near the monkey cage. The employee sold all the monkeys at $700 each.
The rich bought monkeys in big lots. The poor borrowed money from money lenders to jump on the monkey hype train too! The villagers took care of their monkeys and waited for the merchant to return.
But nobody came! Then they ran to the employee, but he had already left too!
The villagers then realised that they have bought the useless stray monkeys at $700 each and were unable to sell them!
This business is known as the STOCK MARKET! It made a lot of people bankrupt and a few people filthy rich in this monkey business. That’s how the stock market works…