If you invested in the S&P 500 in 1968, you'd be waiting until 1992 before you saw any return on that investment after accounting for inflation, and the inflation adjusted S&P 500 was on a net-losing streak for the whole period from 1968 to 1982 before it started going up again.

People believe the line will always go up, and maybe it will, but it's still at least possible for it to be on a quite painfully downward trend for over 12 years at a time.

I'd argue it's also not at all irrational to worry that we may be on the precipice of a similar situation right now, or perhaps even on the precipice of the situation at the end of the 1920s, where it would have taken more than 35 years for the S&P 500 to recover from its previous highs.

Your colleague is probably more risk-adverse than is rational (and I would say more risk-averse than most Austrians or Germans), but I would also argue that a lot of people blindly throwing all their retirement money at the S&P 500 might not realize just how much risk they are exposing themselves to.

https://www.macrotrends.net/2324/sp-500-historical-chart-dat...