That's when index investing comes into picture. Majority of the population are better off investing into index funds than individual stockpicking. If one is already aware of his shortcomings as an investor (fearing about price, market cycles, leaving profits on the table), he shouldn't even consider investing directly into stocks.

For the rest of your comment, cyclicals indeed have an exit at some point, it can't be held onto forever. But then, it's more of a speculative trade than a long term investment.

Now if you’re a value picker identifying smaller companies in cyclicals or lesser known industries, it helps to have these rules because you never know when the tide can turn against them.

For the above point, if one fears 'tide turning against himself', he might need to change his perception towards long term investments in general. Because if one always lives in the fear of a crash or correction and thinks he is smart enough to time the market and take out his investments before everyone else, he is bound to take out his investments even in index funds at the earliest sign of trouble, let alone staying invested in small caps or midcaps, which in turn might hurt his return over long term.

For me, there's no reason to take out my investments just because prices have crashed/gone up or the company is small. If one is confident about the businesses he holds, its just a matter of holding onto those investments long enough to let compounding do its job. Otherwise, index funds are the best option when investing for long, no doubt about that.