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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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.
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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Yes, or that your cash flows from them will be reduced. I'm guessing toys, being discretionary, would take a hit in a recession.
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Yeah, always have to have a reserve for things like that. I'm not sure if they do, but you're probably right. Regardless, the transition from brick-and-mortar to e-commerce may compensate. That's what happened in 2009.
End of conversation
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