The heart of the conversation is a simple, stubborn truth: risk is not a line on a volatility chart—it’s running out of purchasing power when you need it most. We frame the post COVID economy as a secular shift where persistent inflation and policy choices erode the value of cash and traditional bond-heavy portfolios. This cycle challenges the old 60/40 playbook by raising correlation between stocks and bonds, altering return drivers, and forcing savers to think like allocators. We unpack debasement in plain language: more money chasing the same goods waters down currency the way you dilute soup—more liquid, less substance. That doesn’t mean the US dollar loses reserve status tomorrow; it means your dollars silently buy less over time. So the question becomes: how do you build a portfolio that can breathe in a higher inflation world while still paying your bills in dollars when life hits sideways?
The outlined approach rests on five core asset categories—each distinct in drivers and risks—combined with real financial planning: high quality residential real estate, large cap US equities, precious metals, Bitcoin, and liquid alternatives. Real estate leads not because we expect a return replay from 2012–2021, but because the US 30 year fixed mortgage lets households mirror the sovereign playbook: borrow long in nominal dollars, repay with inflated dollars. Housing also has utility—you must live somewhere—so its return isn’t purely financial. The key is prudent leverage on high quality properties and patience over a full cycle; unlevered, the return profile may lag inflation. Leverage transforms modest nominal appreciation into acceptable real outcomes while providing a hedge against extreme debasement scenarios where shelter’s value dominates. That said, housing is idiosyncratic and path dependent; local markets, financing terms, and maintenance discipline matter as much as macro theory.
Large cap US stocks earn a place not from stock picking bravado but from structural flows and pricing power. In a wage inflation environment, broad franchises with durable moats and global supply chains can raise prices, defend margins, and translate nominal growth into earnings. US retirement infrastructure—401(k)s, target date defaults, and a pervasive passive allocation culture—channels continuous bid into large caps. Policy reaction functions (“the Fed put”) amplify this effect when drawdowns threaten household balance sheets. None of this eliminates volatility; 2022 showed how rate shocks can pressure multiples and create painful interim losses. The lesson isn’t avoidance; it’s planning. If your near term liquidity needs are real, set aside the dollars you’ll need so you aren’t forced to sell equity claims at cyclical lows. Ownership of enterprises—Walmart, Microsoft, Apple, Coca Cola—means ownership of productive assets that can reprice with inflation over time, even if the path is bumpy.
Scarcity assets—precious metals and Bitcoin—occupy a related but distinct lane. Their economic story is simple: finite supply versus elastic fiat supply. When more dollars exist relative to ounces or coins, it takes more dollars to buy the same unit. Gold and silver function as purchasing power anchors across long arcs, while Bitcoin adds a high volatility, high convexity layer that can respond sharply to liquidity cycles, adoption waves, and macro stress. They don’t always move together, nor do they consistently hedge daily equity risk, but their correlations diverge enough from stocks to improve portfolio resilience. Thinking in ounces rather than dollars can reframe value: in gold terms, assets sometimes get cheaper even when dollar prices rise. That mental model sharpens the distinction between nominal gains and real gains—a crucial skill when inflation runs hotter than textbooks promise. Sizing is critical; the goal is insulation from debasement, not overexposure to volatility.
Liquid alternatives round out the mix by targeting return drivers that aren’t just “beta in disguise.” Too often, investors label private credit and private equity as “alts,” yet their performance rhymes with equity and credit cycles; the diversification is less than it appears, and illiquidity can hide “stored volatility.” True liquid alternatives—market neutral equity long/short, managed futures, and multi strategy vehicles—seek non correlated return streams: spreads between winners and losers, trend following across rates, currencies, and commodities, or volatility harvesting with risk controls. Historically locked behind hedge fund gates, many of these approaches now exist in transparent, exchange traded formats thanks to regulatory changes enabling derivatives use in funds. They remain complex and require due diligence, but in a regime where stocks and bonds can fall together, even modest allocations to genuinely orthogonal strategies can protect the plan when it matters most.