Cash & Volatility
I rarely hold much cash because it's a loser (except in deflationary times). Granted, it is the ultimate in non-volatility but the only real reason to hold cash is so that you'll feel a little better on days when the market goes down. People say they hold cash so that they can buy stocks when the market is down, but while they are waiting for that opportunity the market is going up and their cash isn't. The more fully invested you are, the more money you'll make over time.
On the other hand, times like these...
My strategy (for the equity portion of my portfolio) is simply to cycle from the more volatile equities which I usually prefer to less volatile (lower beta). I don't want stocks right now that are going to do whatever the market does only more so. That's what I usually want, because the market usually goes up so it's the smart play, mathematically speaking. But for now, big fat boring dividend-paying companies will do a whole lot better than cash if the market rebounds and will do a little less worser than the SCV and MCG stocks that I usually prefer if bad things happen (as they often (but not always) do when the leaves start to turn. Why do you think it's called "fall"?).