It seems to me you are conflating different types of investors that take short positions: * What you are describing is a form of market manipulation where some

It seems to me you are conflating different types of investors that take short positions: * What you are describing is a form of market manipulation where somebody will take a short position and then have somebody else publish a hit piece on a company. This type of 'investor' definitely exists, but it's relatively rare because it's fraudulent in essence. The timeframe for this type of scheme is short - often only a few hours or days at most. * Then there are dedicated short funds. Think of them as the opposite of long funds: they don't believe in an increase in value but a devaluation over time (meaning weeks, months, or years). The "conflict of interest" is not different to a long fund, just in the opposite direction. There is a subtype here that focuses solely on what they perceive are fraudulent companies, think Wirecard, Sino-Forest, Nikola, etc. * Last but not least every long fund will have some sort of short position, simply to hedge 'against the market'. Say you invest into a certain type of industry, then a typical hedge is to short what you perceive is the weakest company in the industry.