Sacerdote inverts his long-only framework to identify shorting opportunities. This includes technologies that are too early for adoption (e.g., early VR), companies lacking a competitive advantage within a real trend (e.g., non-Apple smartphone makers), or mature businesses being disrupted by a new S-curve.

Investors bet against new drug launches because the shift from a research-focused culture to a commercial one is seen as an 'unnatural transition.' Companies are graded harshly on early results, creating a predictable valuation dip that hedge funds exploit, as seen with Portola Pharmaceuticals.

The most effective shorts in cyclical industries aren't just a bet against the macro trend. The best opportunities arise when a commodity's price is already falling, and you can short a specific company whose weak management team is likely to execute poorly, creating a 'double whammy.'

The psychology of a successful short seller involves immense patience and the willingness to be wrong most of the time. The ultimate reward is not just financial but psychological: the 'delicious' feeling of being proven magnificently right for a brief period when the consensus fails.

When launching an innovative product, the cost of educating consumers is a direct hit to margins. Many great products fail not because they are inferior, but because the expense of explaining their value is too high to sustain profitability, a concept described as "education eats margins."

Early-stage biotech companies are vulnerable to short selling in public markets because their experiments run for 12-24 months, creating long periods without news flow. With no catalysts to drive buying ("no bid"), hedge funds can short the stocks until data is released, highlighting a structural disadvantage of being public too early.

Rushing to market without data-driven pricing research is not being agile; it is a form of professional negligence. This approach prioritizes the appearance of speed over the sustainable creation of value, setting the product up for failure from day one.

Traditional valuation metrics are irrelevant. The key is to identify new, impactful information that will bring in a new class of investors and reset the market's perception of the company. This allows for making highly profitable, contrarian bets on stocks that already appear expensive.

Dan Sundheim argues that while retail-driven markets create more shorting opportunities, the risk of a coordinated squeeze makes concentrated shorts too dangerous. The modern strategy is to hold a much more diversified portfolio of smaller short positions to survive extreme, irrational price moves that can 10x or 20x.