My buddy from Florida sent me this...:
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If you have difficulty understanding the current world economic
situation, the following should help:
Once upon a time in a village, a man announced to the villagers that he
would buy monkeys for $10.
The villagers seeing there were many monkeys around, went out to the
forest and started catching them.
The man bought thousands at $10, but, as the supply started to diminish,
the villagers stopped their efforts. The man 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 rate increased to $25 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 act
as buyer, 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 he returns from the city, you can sell
them back to him for $50.'
The villagers squeezed together their savings and bought all the monkeys.
Then they never saw the man or his assistant again, only monkeys
everywhere!
Welcome to the Stock Market!!!!!
Best explanation of the stock market I've ever seen is the tale of the
two farmers and the mule:
Once upon a time, there were two farmers. One farmer owned a mule and
the other didn't. One day Smith decided that he needed to do some
plowing and since Mrs. Smith absolutely refused to be hitched to the
plow again, he went to see Jones about borrowing his mule. Jones
thought about it awhile and decided that he didn't want to loan out
his mule but he would sell it to Jones. After some dickering around,
Jones bought the mule for $50.
Well, Jones went ahead with his plowing but before he was finished, he
saw Smith approaching across the field. Smith had realized he needed
to plow his fields and he couldn't get either Mrs. Smith or any of the
little Smiths to pull the plow. So he headed over to Jones's to buy
back his mule. Jones realized he had an opportunity right there in
front of him and refused to sell the mule. But, after some more
dickering, Smith succeeded in convincing Jones to sell the mule for
$100 for a profit of $50.
Well, this went on for several plowing seasons with Smith selling the
mule to Jones and then turning around and buying it back before it was
too late to plow his own fields. After several years of selling the
mule back and forth with the price of the mule reaching $30,000.00.
After the most recent sale, Jones was leading the mule home and the
mule fell over dead. Smith saw the mule fall and came running out to
see what happened. On seeing the mule was dead, he looked at Jones and
said, "You know, I'm really sorry to see that mule die. We was getting
rich selling that mule!"
And that is the stock market in a nutshell, folks getting rich selling
a mule back and forth.
The real value of any company's stock is how much the stock would
receive from the proceeds from liquidating the company. Every dollar
paid for a stock over and above that small amount is the same as a
chip pushed out onto a roulette table. I don't know why people think
there is some intrinsic value in those pieces of paper that are traded
back and forth in the various stock exchanges. Well, in fact, they
aren't even pieces of paper anymore. They only exist as a ledger entry
in the books of the corporation.
There was a deal in the paper the other day with a headline to the
effect the some 700 billion dollars had evaporated out of the stock
market. There's something wrong and very misleading with that
headline. Every dollar someone spends to buy a share of stock is given
(less commissions) to the someone who sold the stock. None of it
remains in the "market". So that 700 billion dollars was never in the
stock market to "evaporate". The stock market is no less a negative
sum game than that roulette wheel I mentioned earlier.
Tom Veatch
Wichita, KS
USA
On Wed, 8 Oct 2008 16:23:35 -0500, "Leon"
<[email protected]> wrote:
>AND FIY the "Media" is the man's assistant.
>
>More and more I believe that reckless freedom of speech should be against
>the law.
>
Shouting "FIRE!!" in a crowded theater, ya think? But, it gets
ratings, so it can't be all bad.
Tom Veatch
Wichita, KS
USA