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They really aren't being passive at that point, are they? They've become an active investor due to panic.

Maybe not if we're using a strict definition, so I'll add some words to what I said before:

Even passive investors can turn into active intestors and panic sell when they see their 401k balance shrinking fast.

Here's an example of someone trying hard to stay passive during the 2008 downturn: https://www.bogleheads.org/forum/viewtopic.php?t=25126

Interesting link. I see the poster is still active (and likely relatively wealthy) today at age 88. Good for him.

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