I’ve heard a few different people tell this story when trying to explain the stock market. It’s an old story but grifting is an old trade.
There was once a small village located deep in the rain forest, far from all the horrors of modern day progress. The villagers were living an easy life, masters of survival, they had become accustomed to their harsh jungle environment.
Most mornings were spent gathered around the fire pit, discussing the day’s business and decoding the previous night’s dreams. All was grand until one morning when a stranger arrived, interrupting their morning discussions with an offer of easy riches.
The man explained how there was a great need for monkeys in the city and he was offering $10 for every monkey they could produce. The villagers seeing that there were many monkeys around, went out to the forest and started catching them by the dozens.
The man bought hundreds of monkeys at $10 a head but as supply started to diminish and the hunting became more difficult, the villagers stopped their efforts. Not one to be denied, the strange man announced that he would now pay $20 for every monkey caught.
This renewed the villagers efforts, sending them back into the forest to produce more monkeys. It wasn’t long before the supply diminished even further and the villagers once again returned to their easy going lives.
Soon the man increased the bounty to $25 each and the supply of monkeys became so little that it was rare for the villagers to spot a monkey, let alone catch it! The man then announced that he would buy all monkeys at a staggering $50 each!
The villagers again redoubled their efforts but since the man had urgent business in the city, his assistant would now be buying the monkeys on his behalf.
In the absence of the man, the assistant told the villagers. “Look at all these monkeys 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 back to him for $50 each.”
The villagers then rounded up all their savings and bought back all the monkeys. Unfortunately they were never to see the man nor his assistant ever again, only monkeys everywhere.