As Peter Cohan recently wrote, Warren Buffett believes that the Chinese stock market has overheated.

So how can investors profit, with possibly more upside than shorting the index? First, an analogy:

If you were in California during the late 1850s, and received a tip from the foremost gold expert in the world that the California Gold Rush was about to end, how might you seek to profit from it? If possible, I would try to find companies to short: the cottage industry of shops selling shovels and picks to would-be miners would be a prime target, if I could find such a publicly traded company.

This brings me to China Finance Online (NASDAQ: JRJC), a high-flyer trading at about 662 times trailing-twelve months' earnings. The company markets stock-tip newsletters to Chinese retail investors, through a really (not) innovative distribution system: telemarketing. Why that business is worth $700 million is beyond me.

The catalyst for the company/stock's decline could be a softening of the market. Everyone's excited about stocks because the market is up big. But if people start losing money, how many are going to want to cancel their subscription and find a new hobby? A lot.