I conduct a very concentrated portfolio. I use to look for companies in sectors which I think that are going to outperform the market to open long positions, and, on the other hand, I also look for companies/commodities in sectors which I think that are going to under perform the market or distressed companies to open short positions using put options.
I use companies instead of opening a long position in a commodities mainly because of two options:
- My account is small and it allows me to resist momentary downside movements.
- Companies generate FCF, what can benefit me while I own shares of the company via shares repurchases or dividends.