I’m probably not alone in noticing a sharp decline in revenues from standard business activities on the internet — whether that’s from advertising, affiliate sales, or direct selling of products and services.

All the weather vanes are swinging south and, with forecasts that the credit crunch could last for two more years, may stay that way for some time.

How can we buck this trend and not only hold our own, but actually come out ahead? We should look at professional investors, especially the big, successful ones.

The Warren Buffetts and George Soros’s of this world build large cash reserves during bull markets. Buffett has a war chest of tens of billions of dollars and is looking seriously at Britain and Europe for bargain buys during the downturn. There are plenty of them.

For those of us with more modest resources, Soros perhaps is a better example. He it was who sold sterling “short” during the currency crisis of 1992. He is reported to have earned over a billion dollars in a few weeks.

Effectively he bet against the pound’s ability to remain in the European tied currency system — then called “the snake” or ERM — in the face of massive speculation against it.

He was right and did Britain a huge favour by scuppering the crazy political experiment. We owe it to him that the UK is not in the single currency, the eurozone, right now.

So what is “short selling” and how might it benefit internet businesses?

When you “buy long” on a stock or investment, it means buying it for an expected increase in price. But when you go short, you are anticipating a fall.

Short selling is also the selling of a stock that the seller doesn’t own. When you short sell a stock, your broker will lend it to you. The stock may come from the firm’s own inventory, from one of its clients, or from another brokerage firm. The shares are then sold and the proceeds credited to your account.

Now here’s the rub. At some point you must cover the short by buying back the shares and returning them to the broker. If, as you’ve gambled, the price drops, you can purchase them at a lower price and pocket the difference, minus brokerage fees. For example, if you could have predicted the ups and downs of the Microsoft-Yahoo skirmishes recently, you would have cleaned up.

Of course, if the price rises, you lose. Essentially this is about winning in a falling market. With money currently chasing every store of value, like gold, oil and certain other commodities, funds are draining away from many assets and valuations are falling — just look at your house price.

Talking to a trusted broker about short selling may well be a way to replace lost sales in medium-sized internet businesses. With falling markets set to continue, turning logic on its head may be the only way to stay afloat if things get really bad.

Any investment takes a lot of nerve of course — and single-mindedness. A few months ago I was intent on going long on gold. However, another call on my cash intervened and I forfeited the many thousands of dollars I might have made on the spectacular rise in the gold price to around $1000 an ounce.

Going short is one way to survive in a falling market. As sailors say, “any port in a storm.”

Note: This post is not intended as investment advice or to influence your investment choices in any way.