Your risk with holding onto your cash until a downtown is that the crash won't be more than the rise. The market will need to crash to below current levels for this strategy to come out ahead.

A lot of people have been waiting for a crash for years. People on 2013 were saying that the bull market couldn't last much longer, and here we are in 2019.

At the end of the day, it's a bet on the market. Personal investment is 80% regret-minimization so make your bet but hedge against it somewhat.

The one exception some people have to dollar-cost averaging (investing a fixed amount regularly) is "I have a giant pile of savings and I want to buy into the market". Some people advocate still putting it all in right away and investing for the long term; others advocate gradually moving into investments, such as investing 20% a year for five years.

Either way, though, you should start investing that 10% of your income; the only question is what to do with what you've already saved. You could, for instance, match that 10% every month from your existing savings. That way, you're not dumping a pile of money into stocks all at once.

(Also, in case you don't already have a specific plan for investing: index funds with very low overhead, such as Vanguard's VTSAX.)

No, you're not dumb for holding some cash/CDs/other liquid equivalents. But make sure you're getting at least 2% interest at Ally/Marcus/one of the other online banks. That said, I wouldn't go 100% cash, even if you think it's going to crash in the next year - the Fed can probably keep the music going a lot longer than you think it can. I'd set up an asset allocation and stick to it. Here's a rather conservative one, if you're worried: https://portfoliocharts.com/portfolio/golden-butterfly/

Or this one, based on Bridgewater's All Weather portfolio: https://portfoliocharts.com/portfolio/all-seasons-portfolio/

I'd try to understand them before you choose one, though - your asset allocation is one of the most impactful investing decisions you'll ever make. Gold is very divisive, for example, so if you want to go with one of these that includes it, I'd understand why. (It's unproductive, but it's generally anti-correlated with a lot of other assets, which is increasingly rare, and can be very helpful when rebalancing).

How is money being lost? I buy 100 shares of company X for $10 ($1000). The market tanks and now I can buy 100 shares of company X for $1 ($100). You could say that I now have 200 shares of the company that are worth $200 (a $900 loss), but the market will recover (it always has in the past) so when those shares are again worth $10 I can sell them for $2000. The only way people could lose money is if they sell when the market is down, but you don't sell when the market is down - that is when you use cash or other investments that are not subject to market fluctuations.