Actually, I am not trying to "blame the investor". Unlike you, I am crediting a significant body of long investors with good judgment! The good judgment to sell when the writing was on the wall.
Many long investors, the bulk of the smart money, being smarter than the people find where you and your buds hang out, saw the same writing on the wall the shorts saw, and bailed. Sold their long positions. That's because that round of toxic financing made the prospects of the company too risky. When they should have. Leaving a scattering of bagholders of the sort we are familiar with here, who have found a habitual object of blame. Instead of themselves.
Sorry, you have convinced me this applies in your case -- an investor who does not recognize the pitfalls of investing in companies with toxic financing, should mostly be in index funds.