There is actually a technical term for the effects of holding "dry powder" in reserve on overall investment performance - it is called "cash drag"
I think Warren Buffett would use the term "value investing".
Sure, it's a cash drag when it's missing out on 7% APY for 2-3 years. You feel pretty stupid watching the pitches go over the plate, even when there's no umpires or strike zones. You have a hard time keeping a straight face when you say "Don't do something-- just stand there!"
But when you can jump in on a 30%-off sale, you feel a lot better.
Yeah, I can hear the naysayers now: "Easy for Buffett, he has billions and opportunities that we retail investors will never see." Well, they're just looking in the wrong places. Chances for a 30% discount on an S&P500 index fund come along only every decade or two. However smaller sectors (like international, emerging, and small-cap value) go crazy every 5-10 years. Brewer is an expert at buying bonds for 75 cents on the dollar, and he only has to wait a year or two before cleaning up behind that elephant parade. Individual stocks get cut in half with every annual or quarterly report (admittedly sometimes for very good reasons). You landlords know how to find distressed real estate and either flip it or cash flow it-- and that's practically every day.
"Dry powder" is only an asset if you know how to hunt & shoot. If you're just getting your meat from the supermarket with every paycheck, then it makes no sense for you to stash a hoard of ammunition.
I try to limit myself to six clichéd analogies per post. I'll stop now.