Yes, this is an important point. Just looking at a stock market index over time doesn’t reveal the full picture because most investors in a bubble don’t buy the index. That would be boring and they’d miss on the imminent gains on the hot stocks! So instead they pick.

If you picked ten stocks in 1928, many of them were bankrupt or near zero in five years. Same for dot-com stocks in 1999.

So now you have maybe 10% left of your original capital. You could go conservative, invest it in the index and wait. Assuming a 8% annual gain it’s going to take you 30 years to make back the money you lost (not accounting for inflation). Or you could continue picking stocks and maybe increase the risk level to make the 10x gain you need to get even.

The average bubble investor probably isn’t successful even over a period of decades.