> In the case of the Internet Bubble stocks were down 78%, but it was not hard to do well in the end given diversification and a long enough horizon.

This is untrue. If you were invested in what became the stars of that era: Amazon, Red Hat, Cisco, a few others, you eventually made decent money, although far worse than if you had stayed out and bought the dip.

If you had a diversified portfolio of 'new economy' stocks which didn't include a few winners like this, you might have lost over 95% of your money and never got it back. Lots and lots of stocks simply disappeared or were bought for peanuts. Many others, including lots of very very highly rated ones like Yahoo never exceeded their bubble-era peaks.