The West Midlands outfit went into Saturday's Premier League fixture with momentum having put together a four-match unbeaten streak and won their most recent games.
However, conceding a spot kick within the opening two minutes of the game set the tone as Bournemouth stormed into a 3-1 advantage after just 18 minutes.
Although Wolves halved the deficit after the break, Justin Kluivert netted his third penalty of the game with 16 minutes remaining to secure maximum points for the Cherries.
In scoring three times from the spot, the Netherlands international becomes the first player in Premier League history to net a hat-trick of penalties.
"Crazy, crazy errors"
While Wolves will feel that they had reason to feel aggrieved at some of the VAR decisions that went against them, O'Neil preferred to focus on a defensive performance that was full of mistakes.
Speaking to Match of the Day, the Englishman said: ""Incredibly disappointing, and self-inflicted. Some crazy, crazy errors there. Especially early in the game. It's disappointing, the lads are equally disappointed. We need to turn our attentions quickly to Wednesday with a big test against Everton.
"Bournemouth ask you certain questions and unfortunately we didn't find enough answers. Their first was from a channel ball which we worked on for ages, ages, and we didn't deal with it.
"Crazy, crazy penalties to give away. We have to write those off, because you can't win games if you concede goals like that.
"Any error as big as those at this level is going to be tough to bounce back from. We've given ourselves a mountain to climb which we haven't done in the last four games.
"We were well-prepped and new exactly what would happen. Two back passes, crazy back passes, no need to play back at that point, we could have played forward. The [penalty] decisions looked pretty conclusive live."
What next for Wolves?
As O'Neil alluded to, Wolves are next in action when they meet Everton in what could prove to be a pivotal fixture at Goodison Park on Wednesday night.
With Crystal Palace having netted a late equaliser against Newcastle United, Wolves have dropped into 18th place in the Premier League table.