A military adage, from the intelligence community. It is very difficult to gauge the intent of an enemy who doesn't think like you, who doesn't look like you, who doesn't wage war like you. This is one of the few rules that has made it into the canon of intelligence wisdom. It's very similar to the civilian philosophy that "When all you have is a hammer, all your problems look like nails." The Department of Justice can use this philosophy to prosecute people like the Unabomber, who get caught hoarding materials for home made pipe bombs. The three word phrase is almost self-explanatory, but here's a very brief example:
  • Country A and Country B are traditionally enemies.
  • Country A usually maintains several divisions of tanks at the border with Country B, and Country B maintains a moderately resilient force with a defense-only posture.
  • For no apparent reason, Country A scales down its tank and troop presence at the border.
  • Two weeks later, Country A releases footage of a successful IRBM launch.

You may think this means that Country A is preparing for a war, but based on the idea that capability implies intent, you can safely say that Country A won't invade Country B with tanks anytime soon. The somewhat scary downside is that, because they are capable of launching IRBMs, you have to assume they intend to use them, possibly in a first strike that eliminates the need for a war, and they don't want to pressure Country B with tanks until they have enough missiles built.

One more succinct example, from my father's advice to me as a child: "Never point a gun at anything you don't want to shoot."

I definitely agree with the assessment below--using this doctrine as your sole source of intelligence is a bad idea, as it paints the scariest, most conservative estimate, and sketches in details that may not be there at all. Most analysts agree that no action should be taken based on the content of one report; unfortunately, an analyst's job is to provide intelligence, and not to suggest a course of action.