Whether or not they're discounting the possibility of a prolonged period with little growth, the fundamental issue is that this is essentially unknowable, at least to your average investor. The 2 issues I see with this line of thinking (i.e. comparing it to the Nikkei):

1. You wouldn't want to dump 100% of your money in an S&P 500 index fund. There is a reason to diversify.

2. The point of dollar cost averaging is essentially to reduce the risk of dumping all of your money in (or out) at a bad time. Taking your Nikkei example, I'd be curious to see if you looked at, say, investing the same amount of money on the first of the month over a 2 or 3 year period. The amount of time you'd be under water over the past 4 decades would be much less than just looking at any single instance in time.