Cash gives you options to buy when markets fall lower or build more cash to be a shock absorber to go into GIC's, floating rate bonds paying 6% or rate reset preferreds paying 5.5%. You need these things at the top of the cycle--and one never knows when that it. He holds 12-14% cash now. He thinks this correction is temporary, so he'll be buying beaten-up stocks.

(A Top Pick Aug 15/17)  You want to continue to hold some cash.

(A Top Pick June 23, 2017). The central bank cycle was turning against liquidity. He also thought the market was significantly overvalued and thinks the US market (but not the Canadian one) has gotten more overvalued. He thinks the interest-rate increases have done damage and that business will slow down. He doesn’t know how far the market will go down, but looking at Shiller PE ratio, the market looks 40% to 50% overvalued. In addition, in every 10 year period, there has been at least one 30% correction. He sees a potential for that type of correction now, but can’t predict when it will happen. A different bubble triggers the correction each time. This time, he is watching emerging markets. The US market might continue to do well even if there is a big correction in emerging markets, partially because of the tax cut, but at some point that sugar high will wear off.

He is opportunistic.  Cash dampens the downside and provides opportunity.  He holds about 20% cash.  Believes there is a greater than normal possibility that market will pull back.  Cash will provide capital to purchase cheap stocks.

He was talking defensively then.  A lot of stocks have not done well and many gassy stocks have been pummelled.  

It's a defensive play. You need cash available to make a move on the market. Typically, starting now, we see a pullback, so that's a buying opportunity. The market doesn't have huge runs from May to October with limited return. The other six months, you earn higher returns, ones above 10%. Now is a time to be defensive.