The stock market is not just what companies are worth at any moment.
It's also about what they will be worth, and that's generally a short term metric.
something changes in the economy, expectations are that the company will have some cash problems, Shareholders decide to take their profits and wait it out, it's a seller's market, prices go down. Enough of those, the market starts to drop, emotion kicks in, people sell, lather, rinse repeat.
Institutional investors don't create or control this. They simply buy and sell on actual data. not emotions. So they buy all this cheap stock. When it goes back up - as it always does - they take their profits. See above.
The game isn't rigged. The problem is, some people treat it like a game. Professionals don't, so they win.
Same with shorting. shorting has zero effect on share prices (unless you get emotional). It's simply being smart enough to see headwinds coming, and investing on the determination that a price is going to go down.