I think what a lot of investors have done is this: they have built their portfolios over time. If the various positions have gone up, they continue investing. IF not, they generally stop or even take money back out.
So, for those in the market for a fair amount of time, they have a buffer before their shares go negative. Presumably, they very well might sell before loss of the original capital occurs.
When you see investors still in at 100% invested at market peaks, do not assume that they believe a downturn will not happen. Perhaps they simply believe that their portfolio has appreciated sufficiently to the point where they have a buffer before they need to protect the original investment.
And by building the position over time, it has taken a fair amount of the risk out of their position.
This notion is simple enough, but what gets complicated is in understanding market movements - with the widespread proliferation of computerized algorithims making the vast majority of trading at any given time - a particular market move may not be a simple reflection of investor sentiment. Maybe i have that wrong, but if i do, please correct me.