For some people, like retirees, it is not possible to hold. They will sell to limit losses and still allow themselves to retire. Give the great resignation, we just added millions of retirees who will sell to maintain their savings.
Along these lines, my folks took a bath in 2008. They were using their stock holdings for cash flow. When the market tanked they had to sell more for the same cash flow. Historically, this made sense considering their class of holdings. 2008 was just a shot show.
You make a good point. Nobody wants to retire during a recession, and the point of any investment is to draw upon it eventually. Waiting around for the economy to improve so you can retire is a nonstarter for a lot of folks.