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When you're shorting an obvious fraud, remember that those who need to sell are those dumb enough to buy the fraud in the first place.

You're not betting just on whether they did a mistake, you're betting on when will they realize it.

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Exactly. You wouldn't do "obvious fraud" with this setup: you would do "things that aren't obvious but a couple good researchers could prove". You don't even need to scare everyone out of the security, just do enough to make a few big players go "ooh, I didn't know _that_".

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