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The Cap Seller and The Monkeys Story

I believe that you must have heard this story in your childhood. And fully aware of the moral of the story. But you missed one moral.

Let me tell you the story, one more time.

Once upon a time, a cap seller was traveling by walk by way of a forest to a village. It was a very warm day and so he chose to lay down under a tree and take sleep for some time till the sun sets down. As he was extremely tired, he slept quickly.

When he was sleeping several monkeys came down the tree and pulled the cap seller’s bag. They opened the bag and found the caps inside. The monkeys picked up the caps and climbed back up the trees. The cap seller woke up after some time and was surprised to find his opened bag and the monkeys all using his caps.

The cap seller became very upset, he shouted at the monkeys in the tree. The monkeys yelled back at him. This made the cap seller much more irritated. He picked up few stones from the ground and threw them at the monkeys. This time the monkeys threw the fruits they had in their hands at the cap seller.

The cap seller was shocked at these actions of the monkeys. He thought for a while. This time, he taken off the cap, he was wearing and threw it on the ground. The monkeys that were seeing him also did exactly the same. They threw all the caps on the ground.
The clever cap seller collected all the caps, filled them back in his travelling bag and moved away from that location.

SO, what is the moral?
“Clever thinking can easily solve a problem” You know this .

Another Moral based on technical Analysis. “Crowds tends to behave in a predictable manner, they usually follow influential person/crowds” Here in this story, Monkeys are the crowds and Cap Seller is the influential person.

In Financial Market, Smart money (Mutual fund, Insurance companies, High Net worth Individual) are the influential person and Retailers are the crowds.

Retailers can make money easily if they follow what Smart money is doing.
Buy if smart money is buying and sell if smart money is selling.
What smart money is doing… figured it out by learning Technical Analysis.

“Crowds tends to behave in a predictable manner." This is not applied only to financial markets; this is the real truth. You must have noticed in a meeting or conference, when some people started laughing or clapping, Lot of other participants do the same and participate in laughing or clapping.

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