Daddy, what is wall street?

[Oldfisti]

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 each." The villagers rounded up all their savings and bought all the monkeys. 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.

[TiAvenger]

poly tics is that way ^

[MendoDave]

I think this is more along the lines of "Bidness" and I like the example.

[mitt]

But I thought the monkeys were the ones with the money?

mitt

[Oldfisti]

Sorry. I didn't think this was political. Just funny. I'll be more careful whar I puts my posts.

[mitt]

Sorry. I didn't think this was political. Just funny. I'll be more careful whar I puts my posts.

I don't think it is political either - no worries here!

mitt

[herm]

[MrFryMoto]

did the monkey's have knives?

[OwnyTony]

did the monkey's have knives?

Buyer beware.  I dont think it is political.  Just the way things work. 

[DY]

HAHA, Stupid villagers! 

They should have bargained the buyback down to $25 a monkey!   

Er....

[DucPete]

 

Buyer beware.  I dont think it is political.  Just the way things work. 

Just the way things work?  Meaning that story is an accurate depiction of how the stock market works?

[OwnyTony]

Just the way things work?  Meaning that story is an accurate depiction of how the stock market works?

Yeah because i do not think that the prices of stocks really reflect their true value (as I would assume they are over valued).  People game the system.  Like the buyer gamed the villagers.

[DucPete]

Yeah because i do not think that the prices of stocks really reflect their true value (as I would assume they are over valued).  People game the system.  Like the buyer gamed the villagers.

Stocks aren't SUPPOSED to reflect their true value.  It's what their value WILL BE.  The whole thing is essentially gambling.  And if you get into the market expecting to make a bundle and end up losing money it's your fault for placing a bet that didn't win.  You are by NO means guaranteed a positive return.  You have to weight the return against the risk.  And there is always risk. 

The only part of that story I see reflecting reality is the supply demand piece.

[OwnyTony]

Stocks aren't SUPPOSED to reflect their true value.  It's what their value WILL BE.  The whole thing is essentially gambling.  And if you get into the market expecting to make a bundle and end up losing money it's your fault for placing a bet that didn't win.  You are by NO means guaranteed a positive return.  You have to weight the return against the risk.  And there is always risk. 

The only part of that story I see reflecting reality is the supply demand piece.

how does what you write have any relevance to the Monkey analogy?  It neither confirms or denies what has been stated

[DucPete]

how does what you write have any relevance to the Monkey analogy?  It neither confirms or denies what has been stated

  It was in response to what you said about people gaming the system.  Which you said, was reflected in the monkey analogy.  I'm disagreeing with what you said and that comparison to the stock market.

And I said, the part about supply/demand in that story is very reflective of the econ concept. 


.....Ok, let me be clearer for you.  The idea that the villagers are investors in the market isn't very good.  Unless it's to show how there are some people who blindly invest in the market expecting a return just because.  An informed investor should do the research to know what exactly they are putting their money into.  The stock market is not a system that is "gamed".  Generally speaking, just because someone loses money when they expected to win doesn't make the system unfair.   There are rules in place that are supposed to prevent abuse from happening.  If you have a beef, take it up with the SEC, NOT the stock market in general.  There are always going to be thieves and crooks.  That does not make the system corrupt or broken.