Inflation in my investment portfolio scares me. At the same time, all the solutions to it also scare me. Real estate is a captive asset. Bitcoin is unproven with many catastrophic downsides. Stocks are volatile. Gold?
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If you see stocks as merely businesses and you focus on their fundamental cash flow attributes, much of the volatility in prices becomes much less bothersome as prices fluctuate far more than fundamentals.
While I've never lived through a recession or a significant stock price downturn, it's not the psychology of volatility that bothers me. It's a pragmatic issue. If stocks are my inflation-hedged asset in a downturn, I can't sell them to buy underpriced assets.
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RE and cash, then. But, as you pointed out before, the downturn may not come for a long time. So you want a mix of different assets roughly scaled to your confidence in each scenario occurring. Another factor to consider: How cyclical your businesses are.
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Regarding cyclality, are you saying that I should take into consideration the possibility that whatever cash generating businesses I already own will, during a recession or market downturn, require additional capital which I won't be able to put to use in new purchases?
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