Just came across a section in Howard Marks' Mastering the Market Cycle that I love.

It's a great, succinct summary of what I'm always trying to convey (in posts like yesterday's) about certainty vs. probability, and aligning ourselves as much as possible with what's most likely, even if that is never certain.

Even the best of temperature-taking can't tell us what will happen next...just the tendencies.

Since market cycles vary from one to the next in terms of the amplitude, pace and duration of their fluctuations, they're not regular enough to enable us to be sure what'll happen next on the basis of what has gone before. Thus, from a given point in the cycle, the market is capable of moving in any direction: up, flat or down.

But that doesn't mean all three are equally likely. Where we stand influences the tendencies or probabilities, even if it does not determine future developments with certainty. All other things being equal, when the market is high in its cycle, a downward correction is more likely than continued gains, and vice versa.

It doesn't have to work out that way, or course, but that's the safer bet. Assessing our cycle position doesn't tell us what will happen next, just what's more and less likely. But that's a lot.