Instead of shorting high, they could have just bought a bunch of index funds right in the trough. When "everything" goes down, "everything" is going to go back up.
Conveniently, you wouldn't have to hold any positions in advance, so you'd appear to just be a player who figured out the non-veracity of the news quickly and took advantage of it to beat the market. You'd also not have to sell right away--you could hold onto the positions indefinitely, if you liked. The only problem is predicting the exact inflection point of the drop (i.e. the best time to place the buy order)--but I have a feeling people might be "predictably irrational" in this, and fake-news stories about easy-to-verify facts might have a regular/well-known half-life. This is classic "insider trading", just applied to a whole market instead of an individual stock.
The only advantage of shorting in this case, I think, is if you didn't have the capital to actually make the money you wanted--you could do the shorts naked.
Conveniently, you wouldn't have to hold any positions in advance, so you'd appear to just be a player who figured out the non-veracity of the news quickly and took advantage of it to beat the market. You'd also not have to sell right away--you could hold onto the positions indefinitely, if you liked. The only problem is predicting the exact inflection point of the drop (i.e. the best time to place the buy order)--but I have a feeling people might be "predictably irrational" in this, and fake-news stories about easy-to-verify facts might have a regular/well-known half-life. This is classic "insider trading", just applied to a whole market instead of an individual stock.
The only advantage of shorting in this case, I think, is if you didn't have the capital to actually make the money you wanted--you could do the shorts naked.