The stock market is what physicists call an "unstable system." Like the physical world, the capital markets demonstrate "unstable aperiodic behavior in deterministic nonlinear dynamism."
In other words, you never know what will transpire next.
Consider The Butterfly Effect. Small changes in existing conditions result in dynamic and far flung outcomes within chaotic systems. A pipeline blows up in the Nigerian Delta. The price of oil rises. This negatively impacts U.S. consumer spending. Slows U.S. economic growth. Corporations lower expectations. Uncle Harry gets laid off.
All of which is impossible to forecast.
According to Chaos Theory, unstable systems never precisely repeat themselves. There may be discernible patterns, but there are so many variables left to chance that nearly anything can happen over time.
Bear markets lead to bull markets which eventually reverse themselves. Meanwhile, prognosticators of both the bullish and bearish persuasion speculate incessantly on what lay around the next curve.

The media punditocracy opines on everything from radiation levels in Northern Japan to the impact of weather patterns on the Brazilian sugar cane harvest. Coincidentally, individual and institutional investors seek to determine what deserves a tactical response, and what should be filed away for later consideration.
All the while, markets move in directions that baffle the most seasoned global investors. Up, when it should head down. Down, when it should head up. Sideways, when the status quo is anything but the most logical direction.
Drastic, perpetual outperformance is the pipe dream of amateur day traders who have just opened their first account and approach market timing like sports handicapping. Both of which tend to go poorly, over time.
To be a successful investor, you need not outperform every quarter.
Perhaps you hope to outperform half the time, and then merely keep pace. In so doing, you manage to do that which so very few have been capable of: provide a consistent risk-calibrated return on investment over a market cycle.
But remember, Mr. Market will not cooperate.
Malignant weather patterns will destroy sugar cane crops in Brazil and India -- just when you felt bullish. Earthquakes occur. Wars unfold. Energy costs fluctuate. Many of the variables upon which you counted will change.
And so, you remain flexible. Open minded. Aware of the trends. Yet, cognizant of the possibility for interruption.
Many of the economists and strategists we respect feel that the global economy appears to be in a "pretty decent" position over the next six months. But "pretty decent" does not a good night's sleep make.
Accordingly, as employment strengthens and GDP revisions turn - grindingly - upward. Fed officials question the need for a continuance of highly accommodative credit programs. While that underscores their confidence in the domestic economic situation, the end of easing would not be an immediate net positive for the markets.
Last week saw the S&P 500 climb back to its highs of 2120-ish. Following, bears began to drag markets lower. A pattern that has repeated itself for nine months. For bulls to prevail, they will require an expansion of market multiples, a growing economy, an increase in earnings, or an amalgamation of them all. So forcing the bears into a bout of short covering. Pushing the market higher still.
Yet, there remain many forces at play that could drag markets lower.
Even as stocks sailed higher last week, the winds of war, electoral travails, political upheaval and economic uncertainty continued to break the surface. Much like the dorsal fins of dolphins, roiling the ocean's calm as they swim just out of sight. It is only a matter of time until they jump and break -- spectacularly -- upon the horizon, only to peak, fall and crash again into the sea.
So many variables and possible outcomes. But the current and long-term trends remain upward.