In this episode of Short Selling 101, Noel Smith, CIO of Convex Asset Management, discusses how important protecting downside risk is for long-term success in investing. He argues that strategies utilizing convex payouts are the best way to do so. That is why despite his usual derision for the strategies employed by most hedge funds he sees the business model of activist short-sellers as both rewarding for the short sellers themselves who are taking advantage of similarly convex opportunities like the ones he uses, but also beneficial to market participants more broadly who benefit from the liquidity, superior information, and truth that short sellers bring to markets.