I have noticed on this forum that some posters have such a high net worth they can survive these drastic drops.
Having a HNW has nothing to do with it, IMHO.
If you are still in the accumulation stage, your current cash flow (income) probably does not depend on the value of your retirement investment portfolio at the current time.
If you are retired (as I/DW are), your current cash flow (income) should not depend on the current value of your retirement investment portfolio. You should (as we have done) harvested your gains, over many years, to "cash" (whatever that means to you) to ensure more than a few years of income, regardless of what the market is currently doing.
It's not what you have, but rather how you manage those assets you have that is the important thing related to "survivability" - as you have stated.
Now, if you are still in your accumulation stage and have yet to reach "the number" (
Lee Eisenberg - The Number - A Completely Different Way to Think About the Rest of Your Life) and the markets are upsetting you, then that is an entirely different question.
Now as to your original question, without a doubt I/DW would not be as well off today if we had not participated in the equity market during our accumulation years.
I look at it in a rather simple way. With an equity (direct or fund), I own a very small part of a company (or with a fund, a very small part of many, many companies).
If they make a product that I use, or think I will use in the future, I want a stake in the profits (regardless of how small) over time.
Take for instance something we all use - toilet paper
...
It's a product that is needed and expected for a great deal of the human race. As folks become more accustomed to its use (rather than leaves, used in 4th world countries
), it is an expected staple.
Since most of us use it, and more people will use it as a "leaf substitute" over time, and more importantly that there are more people in the world today - than yesterday, and more people tomorrow - than today, the market for the "product" is expanding.
Sure, we can expect more than a few "toilet paper manufactures" to come on line as the market expands, which will limit the profitiabilty of current manufactures, but I could invest in a sector fund (something like the health care sector, but related to a specific part of the body) to "capture the profits" of many TP manufacturers.
That's just a simplistic way of looking at why we're in the market, but it shows as long as you have a product that folks want/need and there is an expansion of the market for the good/service, there is a chance that you can share in the profits (heck, just look at the release of the IPhone 5, last week - and we do own a piece of Apple
).
Just my simple POV.