Price Predation

I was having a conversation with someone earlier about monopolies, and everyone seems to believe that a big companies have the power to lower their prices until their competitors go out of business.
This rarely, if ever, happens, since it imposes massive costs on the company (which probably has a huge market share and is sustaining far more losses) and the promise of a monopoly price comes in the long term future. Furthermore, even if the large company succeeds, if another company rises up, the monopolist has to do the whole thing over again.

But Posner described with an interesting way some businessmen got around price predation. If a businessman is about to start a new company in a market he knows is run by a monopoly, and one he knows is going to try to use price predation, he should just short sell stock in the monopoly. That way, when he enters the market, the monopolist will start selling below cost and cause its own stock to fall. The new business will be hurt by the price predation, but the businessman makes a fortune from short selling. Once the new business fails, start another new business, short sell the monopolist, and repeat.