You're correct in pointing out that we can only be buying if someone is willing to sell to us. However, one big factor is your time horizon. For average investors like ourselves, if you're investing for the long term / retirement, you generally know that it will recover, whether it's over 1 year, 2 years, or longer. It may go down further, but will it be in the same state 30 years from now? Probably not, so it's relatively safe to buy in at a "discount".
Contrast that to hedge funds, investment banks, and other investment groups that have investors to please and targets to hit in the immediate/short term. For them, their time horizon is shorter and 1) they need to free up cash and 2) they cannot take the risk of holding on because the economy is definitely impacted in the short term.
> know that it will recover, whether it's over 1 year, 2 years, or longer
Let's put this in perspective. The Nikkei is down 80% over the past 21 years. At an optimistic rate of increase of 6% from now, it will be another 25+ years before it hits 38957 again. All up, over 45 years.
Have a look at Shiller's house price graph. From 1890 to 1955 there was zero real increase - and large falls in the meantime. This is 65 years. Again long term is very long term. Same in Australia by the way. The USA and Australia of the most prosperous and successful economies in the C20. Others did far worse.
This "in the long run all will be well" argument just doesn't hold water. Not if you have a human life span.
See for more on this "The Big Investment Lie: What Your Financial Advisor Doesn't Want You to Know" by Michael Edesess. Everything a financial planner tells you may be a self-serving lie.
Yes, I live for the day when people start being greedy on a super-long-term, multi-generational basis, and finally investment banks will work for the general good of humanity.
Contrast that to hedge funds, investment banks, and other investment groups that have investors to please and targets to hit in the immediate/short term. For them, their time horizon is shorter and 1) they need to free up cash and 2) they cannot take the risk of holding on because the economy is definitely impacted in the short term.