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Okay, you know that one of the jobs of a lifeguard is to save people? Also, do you know that when drowning, most people tend to wave their hands as a sign for help? Well, in this story, when the lifeguard see people waving their hands, instead of saving them from possible drowning, he just smile and wave back. That's the joke.

Wow, this explanation is twice the length of the joke itself, lol.