To take a short position

A short position is a financial transaction which an investor sells a security or asset that he do not currently own, with the expectation that the price of the security will decrease.
the investor borrows the security or asset from a broker or another investor and immediately sells it on the open market. The investor expects to profit by buying back the security or asset at a lower price and returning it to the broker or lender, pocketing the difference between the sale price and the buyback price.

When you take a long position in a security, you buy it with the expectation that its price will increase, allowing you to sell it later for a profit. In a short position, you are essentially betting that the price will decrease, allowing you to buy it back at a lower price and make a profit.

Short selling is a common strategy used by investors who believe that the market or a specific security is overvalued or facing headwinds that will cause its price to decline. By taking a short position, these investors can profit from a decline in the price of the security.

How investors take thier short position-

Stocks that they believe are overvalued or have weak fundamentals or on enitire market indexes or sectors if they believe that the broader market is overvalued or facing headwinds.
Bonds if they believe that interest rates will rise, causing the bond prices to fall. They may also short corporate bonds if they believe that the company is facing financial difficulties or has high levels of debt.

Commodities such as oil, gold, or agricultural products if they believe that supply and demand conditions will cause the price to fall (For example the big impact from russia and ukriane war)

Currencies if they believe that the currency is overvalued or facing headwinds such as political instability or economic weakness.

one of the mose famous shorts is "The Big Short": In the lead up to the 2008 financial crisis, several hedge funds, including Steve Eisman of FrontPoint Partners and Michael Burry of Scion Capital, took short positions against the subprime mortgage market. Their bets paid off when the market collapsed, resulting in significant profits for their funds. The story was later popularized in Michael Lewis' book "The Big Short" and the subsequent movie adaptation.