The Deipnosophist

Where the science of investing becomes an art of living

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Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

12 October 2008

How the markets work, part 2

Another laugh, this time courtesy of reader, President of SNAFFU, and friend, James Taylor...

Once upon a time, a stranger appeared in a village, 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 began to catch them. The man bought thousands of monkeys at $10 each; then, as the available supply of monkeys diminished, the man announced he would now pay $20 per monkey.

This higher price invigorated the villagers' efforts, and they again went out to scour the jungle to catch monkeys. With the supply of monkeys diminished to near zero, the local people returned to their farms.

The stranger announced he would pay $50 per monkey, an astounding sum! However, he had to go to the city on some business, so his assistant would now buy on his behalf.

While the stranger was away, his 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 $35, and when the man returns from the city, you can sell them to him for $50 each."

The villagers thought, deliberated, rounded up all their savings, and bought all the monkeys. What a plan; what easy money!

They never saw the man nor his assistant again; only monkeys everywhere.

And now you understand how Wall Street really works.
-- David M Gordon / The Deipnosophist

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