I believe that “cash is king” because cash affords you the most options. Having most of your wealth in real estate or stocks is great when the market is rising. Until the market turns and prices begin to drop. In a rising market, holding a lot of cash is not optimal. But in both rising and falling markets, cash affords you the most options.
Given a choice among several alternatives, the best choice is almost often the one which provides you with the most options. This is true even if that choice generates less income or status for you than others. Since it is not the most optimal option of the various alternatives, it may look dumb to others. But you will be well placed to take advantage of opportunities or manage difficulties when they inevitably come. Sometimes the best choice is not the most optimal choice.