Largest analysis mistake here is looking at past events CDOs as mentioned and believing the exact same thing will happen again. The outcome won’t be the same, because if it were to be then the fact that we know the outcome would be the same changes everyone’s investment decisions.

Sitting on cash is almost universally a bad idea in my opinion (more than a few months of emergency or if you are saving for something). It means you think you can predict the market. You can’t.