Kincella your story to me sounds more like a story of greed rather than of sharemarket horror, the same type of story occurs within every asset class when the person throws the fundamentals out the window and just runs with a gut feel that it has to go back up. Boomers confide in property as they have lived through the biggest property bull run in Australia's history so its hard for them to conceptualise property as an asset class not producing capital gains well in excess of the risk free rate.
The benefit and the killer of shares to a retail investor is their low entry and exit costs, your friend was blind sighted by greed and chose not to use a stop loss and close out his positions in a falling market, given the size of his share portfolio it doesn't sound like he was very well diversified, very smart, nor did he time the market very well to incur that type of loss. Any type of investment over and above govt bonds carry's some element of risk, I'm sure the same tale of woe exists with property investors in the USA trying to catch the knife in their property market which still hasn't found the bottom.
Regarding high risk/high reward super plans, If you timed your entry and exit into these plans, like pulling out just before or straight after Lehman then getting back into during some of Bernanke's QE and getting out when the free money dried up you actually fared very well.
