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I was fully invested in 2001.

You can tell what happened to me. The dot-com bubble burst, and I watched my portfolio evaporate.

Then I tried to play that game again in 2007. We ran up, and I got fully invested again.

We all know what happened there.

Fool me twice, shame on me. I am done.

I have 50% cash right now. 

When this market eventually corrects, how many of you will be sitting around wishing you could buy the dip? 

You will have no money to buy anything.

The Genesis Cog Scanner identifies exactly when algorithmic defense patterns break. 

But knowing when to step aside matters just as much as knowing when to act.

The Darth Vader Problem

Some of you have called me Darth Vader. The naysayer.

Really? I spent most of the year making money long.

So let me be clear about what I am actually saying. We are not going to crash. The probability of a market crash sits near zero.

But a correction is different. A 10 to 15 percent pullback is coming. It is a done deal.

We are overbought. We are overleveraged.

But we are not at that 2001, 2007, 2008 level of overvaluation. Not from the work I have done.

The Pattern That Never Fails

Every time leadership changes at the Fed, markets correct.

I have studied this across four decades:

• Greenspan to Bernanke: massive correction
• Bernanke to Yellen: another big correction
• Yellen to Powell: another correction

Powell is on his way out. He will be gone by late February.

Whoever comes in, I do not care. Regime changes create uncertainty about how monetary policy moves forward. That uncertainty always triggers selling.

And this time, the structural setup makes it worse.

The Structural Warning

Fifty percent of capital this year was shoved into passive ETFs.

People are saying screw stock picking. Just shove money into the market indiscriminately.

Meanwhile, consumer debt sits at all-time highs. Credit cards, car borrowing, mortgages. All of it.

When you lean too far to the same side of the boat, it tips over like the Titanic.

This is the most dangerous time I have ever seen in market history. Not from a valuation standpoint. Not from a psychological standpoint.

It is from a monetary structural standpoint.

If there is a regime change at the Fed while everyone leans the same direction, what is your game plan?

Where is your hedge? Where is your capital?

Why I Sit at 50% Cash

Taking on more debt does not make me want to be fully invested at all-time highs.

The debt will keep going up until one day it just bursts. When will it happen? I do not know.

But you cannot have this go on forever. It will not.

We are going to get a minimum 10 to 15 percent correction in the first half of next year. The Fed transition alone makes this likely. The structural imbalances make it almost certain.

The Lesson That Took 38 Years

The market taught me this lesson twice before I finally listened.

In 2001, I learned what a bubble looks like from the inside. In 2007, I learned that the second time hurts worse than the first.

Now I sit at 50% cash while everyone else chases performance through year-end.

When the correction comes, I will have capital to deploy. You will be watching from the sidelines wondering how it happened so fast.

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