How should you protect your portfolio in an inflationary macroeconomic environment? James Davolos, portfolio manager at Horizon Kinetics, is deploying a “hard-asset, capital-light” strategy focused on businesses that don’t tie up a lot of working capital or use debt to finance their operations. As Davolos sees it, with capital-light businesses there’s no need to time market entries or exits. And, over time, Davolos argues that business models that require less working capital and limit debt earn higher returns. In this interview with Stephen Clapham, founder of Behind the Balance Sheet, Davolos explains the philosophy behind the Horizon Kinetics Inflation Beneficiaries ETF, describes the fund’s top 10 holdings and identifies stocks an investor should avoid in an inflationary environment. Davolos and Clapham also discuss the declining productivity rates, challenges of investing in China amid the Russia-Ukraine war, the fight for scarce resources, the weaponization of trade, and whether the future is one of hope or one of ever-greater risk. Recorded on April 15, 2022.