Recency Bias - Short Term Market Memory?

These are indeed tough times. How many of you hear the common refrain, "I'm just sitting on the sidelines right now." Or, "I'm not taking any risk at this time." So I have a suggestion: Why don't we all sit on the sidelines and take absolutely NO risk and watch the country die a slow death while we watch events unfold? What a novel approach to living under an overpass in a refrigerator box!!
Personally, I'm offended by these types. They don't do anything when times are good, or if they do, they inevitably buy at the top like Mr. and Mrs. middle America does and then grouse about how the "big wigs" took all of the profits off the table! Woe is us!
If you can't see this is the absolute worst approach known, consider an economic phenomenon caller "Recency Bias," the tendency to place too much weight on recent performance instead of the longer track record. Think of a card player who doubles the bet at a blackjack table because they have just won the last couple of hands. The odds haven't changed, but the perception has.
Many learned types, economists, investment professionals and the like are caught up in the latest trends in the marketplace that there is little room left for past relevant events that have manifested themselves over and over again. "Forgetting" the instances of past recessions, crashes and economic maladies, it doesn't take a combination of events that precipitates the current global gnashing of teeth, just a short memory.
We could conclude that our most recency bias would be one of understanding the situation is worse off than it actually is. Housing prices are still off their peaks, but have still increased by 20% since 2000, adjusted for inflation. We reamin wealthier than ever before as a collective unit, per capita disposable income is 18% higher than a decade ago.
If the good times are never as good as they seem, neither, perhaps are the bad one so bad. What to do? Continue with your dream, fight the urge to crawl under the covers and face the music! Look for opportunity from chaos, think scalability and a heavy dose of courage! Is this not the American way?