Stocks are inherently riskier than bonds. Lower on the capital structure of companies (last to have a claim on company assets) and stock cash flows have much greater uncertainty than bonds. The statement that "stocks have higher returns than bonds" should NOT lead one to invest too much in stocks in pursuit of those returns (yes, it has -- the "dumb money" you describe), since there is greater volatility of returns around the average.
Portfolios should be built upon bonds, with stock market risk layered-in only to a degree.
Portfolios should be built upon bonds, with stock market risk layered-in only to a degree.