Dude, where’s my economy?
Here’s an interesting explanation of how our stock market varies in value so wildly while the assets of all these companies remains relatively the same
Once upon a time in a village, 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, the
villagers stopped their effort. He further announced that he would now
buy at $20.
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 increased to $25 each 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 $50!
However, since he had to go to the city on some business, his
assistant would now buy on his behalf.
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 $35 and when the man returns from the city,
you can sell them to him for $50 each.’
The villagers rounded up with all their savings and bought all the monkeys.
Then they never saw the man nor his assistant ever again, only monkeys
everywhere!
Now you have a better understanding of how the stock market works.
