The reason Bernstein suggested that his clients put 20 to 25x expenses in short to intermediate-term high quality fixed income, was because he saw many of them panic, sell near the bottom in 2008, and more importantly, never get back in. Thus causing themselves to become permanently way behind in their investments. This changed his mind completely about the people he was advising about their. So he moved to an ultra conservative stance. Now for funds above that 20 to 25x expenses amount, he still thinks is OK to invest in equities if you so choose. You've at least got your basics covered.
If you believe losses are going to be permanent - well, yes, then it's better not to invest in the first place. But an investor can also make losses permanent by panicking and staying on the sidelines.
And notice, Bernstein didn't recommend people put 30% of that 20-25x expenses in equities. He said 0%.
Regardless, it's probably almost impossible to tell if an investor is going to panic or not. Some of us have been through two horrendous bear markets in short order and have been rewarded for staying the course. Who is to say the next one will have a short recovery - it could very well not, and stay down for a very long time, perhaps a decade or more.
For me, having adequate investments not in equities is the way to go. And a moderate AA currently covers me for over 20 years of expenses without cutting back too much, and that doesn't include the short-term pile of cash/CDs etc. I hold. If equities get cut in half, some of that fixed income would be used to rebalance, so my fixed income stash would shrink. At that time I can decided how much fixed income I can let go of to rebalance.