I guess one thing that I neglected to consider. The common person on the street who's mate invested $500 at $20k isn't likely to invest for fear of getting burned themselves but institutions who are far more clued up and understand the cyclical nature of markets are far more likely to sniff a bargain at $3k. I would think that the amount invested by those institutions will outweigh that of the public. It will probably be the institutions who take us through the slow grind back to an ATH and then the public who push us to new heights before the next market crash years from now.
Sounds about right to me. The proper finance professionals look years into the future for their payoff. It's the twitchy kiddies who throw in the towel instantly and at great cost to themselves. It's been the same story since the concept of wealth existed and it's never, ever going to change.