Not necessarily. That rule is only true in a zero sum game. That is not the case in the equity market. Selling doesn't necessarily equal shorting. You're only short if you didn't own it to begin with. If you sell a stock that you own, you are simply saving money that would've been lost. You aren't by any means making money. If a company issues 1,000 shares at $100. They have just virtually created a value of $100K for that company. As long as the status quo is maintained, that $100K of investor wealth stays constant. The value of those shares is determined by the bid/ask prices, or more accurately some compromise between the two. If the CEO were to announce tomorrow that the PO is cut in half for the year, you'll see the bid plummet to let's say $50. At the same time the ask must also plummet if the seller wants any chance of the transaction occurring. Even if no transaction occurs, the new value of the company is around half what it was. That wealth has vanished. There was no short to benefit, unless you want to start arguing that the company itself was the short. For example, if the company held the initial $100K on reserve and waited for the price to drop to $50, then they essentially shorted the company @ $100 and then bought it back @ $50. After which they would still own 100% of the company and has the extra $50K on hand. But in the real world, the company doesn't hold the cash in reserve. They use it for operating costs. That money is gone. Wealth has vanished.
Quite apart from their poor timing and judgment, perhaps some of the people who bought at the top with their hard-earned savings may disagree, as it relates specifically to them.