Parrots
Posted: Fri Aug 30, 2019 10:06 amOnce upon a time, a man named Jim appeared in a village and announced to the peasants that he would buy blue parrots for $7 each.
The peasants, knowing there were many parrots, went to the jungle and started catching parrots. Jim bought thousands at seven dollars each and, as supply started to diminish, the peasants stopped their effort.
Jim announced that he would buy parrots at $20 each. This renewed the peasant's efforts and they started catching parrots again.
Soon, the supply diminished and people started going back to their farms. The offer increased to $27 each and the supply of parrots became so scarce it was an effort to even find a parrot, let alone catch it!
Jim now announced that he would buy parrots at $60 each! However, since he had to go to the big city on some business, his assistant would buy on his behalf.
The assistant told the peasants "Look at all these parrots in the big cage that my employer has already collected. I will sell them to you at $35 bucks and when my employer returns, you can sell them to him for $60!"
The peasants rounded up all their savings and bought all the parrots for $500k!!
The peasants never saw Jim or his assistant again, only lots and lots of parrots!
And that ladies and gentlemen is pretty much how the stock market works.
The peasants, knowing there were many parrots, went to the jungle and started catching parrots. Jim bought thousands at seven dollars each and, as supply started to diminish, the peasants stopped their effort.
Jim announced that he would buy parrots at $20 each. This renewed the peasant's efforts and they started catching parrots again.
Soon, the supply diminished and people started going back to their farms. The offer increased to $27 each and the supply of parrots became so scarce it was an effort to even find a parrot, let alone catch it!
Jim now announced that he would buy parrots at $60 each! However, since he had to go to the big city on some business, his assistant would buy on his behalf.
The assistant told the peasants "Look at all these parrots in the big cage that my employer has already collected. I will sell them to you at $35 bucks and when my employer returns, you can sell them to him for $60!"
The peasants rounded up all their savings and bought all the parrots for $500k!!
The peasants never saw Jim or his assistant again, only lots and lots of parrots!
And that ladies and gentlemen is pretty much how the stock market works.
