The End of a Speculative Trading

Once upon a time in a village in Punjab , a man announced to the villagers that he would buy monkeys for Rs10.

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 theystarted catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer rate increasedto Rs 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 Rs 50! However, since he had to go to the city on somebusiness, 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 manhas collected. I will sell them to you at $35 and when he returns from the city, you can sell them back to him for Rs 50.'

The villagers squeezed together their savings and bought all the monkeys.
Then they never saw the man or his assistant again, only now the monkeys were everywhere!