we live in a world where stocks pay dividends and inflation eats away at our savings.
http://www.moneychimp.com/features/market_cagr.htm is a calculator that combines total return and inflation in one place. The downside is that the time-granularity is a year.
For the five 12-year periods starting 1996-2000, the total inflation-adjusted return is
1996-2007: 113%
1997-2008: 12%
1998-2009: 5%
1999-2010: -6%
2000-2011: -21%
So if I'm interpreting your strict claim correctly, that's at least falsified.
If we reduce the timeframe to an actual decade, then the periods staring in 1999, 2000, and 2001 are the three with negative inflation-adjusted total returns.
I've
posted before that my personal inflation-adjusted annualized return for June 1998 to June 2012 was 4.8% per year, while the calculator shows that the market returned only 1.2%. Clearly my regular investment schedule gave me a significant boost; I don't know if that was due to the specific shape of the market over that period, or to the variations in my regular contribution amounts (which were unrelated to market values), but that's at least one example where the benefits of dollar cost averaging didn't get "canceled out".
All that said, your general point that people may be underestimating the risk of the stock market (particularly in the current environment) is well-taken.
I think some of the lifetime risk is reduced by the accumulation period. Those who retired in 2000 had the benefit of 10-15 years worth of redonkulous returns during the accumulation phase to balance out the crappy returns for the next decade. The danger is those who planned to have a 15-year accumulation phase, but then saw in 2000 that they hit their goal only in only 9 years and pulled the plug. (that's really how long it would have taken starting in 1991 for someone with a 55% savings rate, which the Shockingly Simple Math says should take 14.5 years). That's part of why I'm still working even though my investments are currently well above 25x my expenses; I'll be much more comfortable after the next market drop.