How Stock Market Works

Are you currently shaking your head wondering what isgoing on in the financial markets? Here is a small story(fromAfrica ) that illustrates it nicely.Once upon a time, in a village, a man appeared and announced to the villagers that he would buy monkeyseach. The villagers, seeing that there were many monkeys around, went out into the forest and started catching them.The man bought thousands of monkeys at $10 and, assupply started to diminish, the villagers stoppedtheireffort.The man then further announced that he wouldnow buyat $20 for a monkey.This renewed the efforts of thevillagers and they started catching monkeys again.Soonsupply diminished even further and people startedto their farms.The man increased the price to $25 permonkey, and the supply of monkeys became so small thatitwas an effort to even find a monkey, let alone catchit!Theman now announced that he would buy monkeys at$50!However,since he had to go back to the city on some business,hisassistant would now buy on behalf of him.In thethe man, the assistant told the villagers:"Lookat allthese monkeys in the big cage that the man hascollected.Iwill sell them to you at $35 and, when the man returnsfromthe city, you can then sell them to him for $50each."The villagers rounded up all theirdipped into their savings, paid the assistant, andall the monkeys at $35 each.They never saw the man,nor hisassistant, again … only monkeys everywhere! Now youhave abetter understanding of how the stock market work