The story of monkey buyer is very famous in the investing world. Most of us have heard this.The moral of this story is, how an investor can put his head on troubles buy not using common sense or hearing the word of others or believing the market rumors. Read this and assess yourself to avoid big investing mistakes.
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.There are cunning people around the world of investors. They always try to cheat innocent investors using various tricks. Remember, how penny stock prices going up like rocket? This is the same trick using by big brokers. They will start buy all the shares and thus the price of a particular stock will come up.People will start buying after seeing the raising price of this stock and this brokers will start selling to there shares to this poor investors. Finally, cheaters will get huge profit and those who bought the stocks suffer huge lose by holding stocks that has no liquidity and the huge down fall of its price.Always remember the above story as an investor to escape from various traps. Happy investing