he had already left the industry by the time of the interview, but fair. second hand anecdotes should be treated as amusing fiction at best

Many/most reputable places that do this kind of trading have fixed whole market exposure, either long only or long/short (and a lot are long/short). The idea being that since it's mathematically impossible for the average hedge fund to beat the market in the long term by much (tbf, less so since the rise of index funds), they should at least be able to provide returns that aren't correlated to the stock market, as any idiot can get correlated returns.

Besides, everyone knows that just because things are getting worse doesn't mean number won't go up - you'd typically trade on the belief that number go up in some more sophisticated way, perhaps by predicting what the fed will do to make sure number go up, or how the books will be cooked to make sure number go up.