If it's a short sale, then Nassim already has the money and is actually the one at risk of not being able to pay if the price skyrockets. There is a bottom to h

If it's a short sale, then Nassim already has the money and is actually the one at risk of not being able to pay if the price skyrockets. There is a bottom to how low a stock can go, but no theoretical upper limit. Although realistically he'd likely be forced to buy into stock if it got too high, keep some reserve of money on hand, and be insured against extreme upticks anyway. A short sale is an agreement for a party to buy a stock at a discounted price on the condition that the other party buy it for that person at a later date. That is, I say "That Chinese stock isn't any good. In two months the price will go down. So tell you what, you give me the money for that stock and you'll get your stock in two months, no matter what the price plus some extra as a discount. If that price goes down, I pocket the difference. If it goes up, I pay that difference as well out of my own pocket." The article is behind a paywall, so I don't know what specific strategy he used. But it'd probably be something along those lines. A bet against someone that the price is going down using his own money. Besides, that sort of risk is exactly what stock traders do for a living - analyze and account for risk. And Nassim is a specialist in a special kind of risk: risks people don't encounter often and thus systematically underestimate.