Benjamin Graham, the father of value investing, once said that in the short-term, the stock market is like a voting machine, but in the long term, it is like a weighing machine. Let's take this concept of a voting machine further and explore why sometimes the market can be erratic.

Imagine a city in a far far away land called Far Far Away City. There, elections for the city mayor are held everyday, except on Saturdays, Sundays and Public Holidays. The candidate who wins the election for that day becomes the city mayor, but only for that one day. The city has 10 million citizens, of which roughly 1 million are farmers and support the left-inclined parties called the Lows (L). Another 1 million citizens are descendants of the nobles and support the right-inclined parties called the Highs (H). The rest 8 million citizens support the mainstream parties called the ...