Footnotes is a monthly publication which summaries our “First Friday” webinar presentations each month. The goal of the Footnotes publication is to capture our “First Friday” presentation’s most important data points, which will make it easier for The Abernathy Group Family Office members to make intelligent decisions based on facts and data – as opposed to potentially conflicted opinions from the mainstream media.
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As a short reminder to each Family Office member, The Abernathy Group Family Office has now sponsored 20+ “First Friday” webinars. All of them are available on our website and “YouTube” Channel if you would like to go back and see how we have interpreted the economic signals, while doing our best to cancel the noise over the last year plus. Our goal: to help you spend less time making intelligent financial decisions, by focusing on causal, predictive data (signals); and ignoring the clamor of biased, irrelevant data (noise).
Commentary from the June 2025 “First-Friday” meeting:
Today’s presentation discusses “The All-Weather Portfolio.”
When should an investor implement an All-Weather portfolio allocation?
Why does a more stable, higher-quality, dividend-generating investment stance provide effective shelter during most economic storms? We also discuss the advantage of ensuring each portfolio includes a responsible amount of safe money that earns a reasonable return while waiting for use after the markets return to a more favorable valuation.
Let me welcome you to the Abernathy Group Family Office’s June 2025 “First Friday” meeting.
My name is Steven Abernathy, and I will be your host today, along with my co-host, Matthew Daley.
In this meeting, we will focus our discussion on the process of creating a Wish List. We will cover what a Wish List is, why it makes sense to create one, when it is appropriate to create one, and how to build one over time.
This topic has surfaced over the last 4 months several times, as we have been showing you that
- Most public markets are priced for perfection,
- Speculation is abundant, and
- Policy is changing rapidly.
Historically, this combination of events has led to unsettling volatility at best and, at worst, could force a significant repricing of assets lower. What drives this cautionary outlook?
First and foremost, publicly traded assets are at or near all-time highs. Earnings are expected to fall short of current projections. When this happens, the narrative shifts from speculative trading (which assumes the market always quickly rebounds from minor declines) to acknowledging misjudgment.
The future is uncertain; current valuation levels make it difficult for intelligent investors to justify expecting reasonable returns at today’s prices. Additionally, earnings are likely to be lower than anticipated, and we face a substantial chance of entering a recession. This situation makes companies worth less than expected and recognizes the future as riskier than we realized. (Of course, this cycle of euphoria, leading to despair, leading to euphoria, happens much more often than most remember. The good news? Those who have invested intelligently and exercised patience and investment discipline when prices exhibited exuberance will be prepared for more reasonable valuations when they appear.)
As we said last month, this is one of the main reasons we all have such a large position in 4-5% U.S. treasury bills, notes, and bonds. We want to have access to safe assets when prices become investable, and 4-5% or more is a reasonable return to expect without any risk while we wait for more investable prices.
Our prepared comments will be recorded today because other families who cannot attend have requested the recording.
Our comments today will last about 30 minutes, allowing ample time to address questions from everyone on the call.
* If questions arise from the content of today’s presentation, please send your question by typing it into the “Chat” box at the bottom of your screen or write it down and raise your hand at the end of the prepared remarks by clicking on the icon at the bottom of the screen.
Our intent has always been to make this monthly presentation resemble a town hall meeting, as we understand that the topics we discuss and our comments may generate related and, at times, unrelated questions.
The main objective of this monthly meeting is to ensure that everyone’s questions are addressed with supporting data while evading the biases imposed on the investing public by numerous Wall Street analysts.
As you know, while our nature is to be realistic in the short term and optimistic about our long-term future, we do not sell any products, and our sole motivation is to help each family make informed decisions.
We want to encourage you to send us your questions, as it is likely that others may have the same or related questions… in short, it makes the discussion more interesting, so please feel free to ask away!
One final NOTE: Please remember to “Mute” your device’s microphone and remain on “Mute” unless you have a question, as background noise is audible and distracting. And by the way, if you haven’t visited our website lately, please take a moment to check it out.
Every Family Office member has access to a wealth of information. Content is added frequently, videos and research reports are available, and published articles and “Footnotes” summaries of each “First Friday” meeting go back years.
With that said, let’s review the topics we plan to cover today.
Slide 2
Just a quick note: if there are topics you expected to see covered but aren’t covered, please either type your topics or comments in the chat box or, as mentioned, click the small button at the bottom of the screen that lets you raise your hand, and we will bring you into the presentation.
Slide 3
The main goal of today’s meeting will be to discuss the essence of one of the most valuable tools in the investment process. It is called by many names, yet today we will call it the “Wish List.”
What exactly is a Wish List?
Why does anyone need a wish list? Is it possible to create and deploy an intelligent investment portfolio without one?
If I am successful in convincing you about the reason even the most successful investors in the world need and use a wish list, you will find it worthwhile to build one yourself.
We will discuss when you need a wish list and when a wish list comes in handy.
Finally, we will discuss how to create a wish list in the simplest and most effective way.
Slide 4
So, what is a wish list? It is similar to many other lists you depend on in life.
It’s a list of the assets you want to acquire or would like to acquire if you had the chance at a reasonable price.
The one caveat is that for this list, one of the unarguable variables is that the assets you include on the wish list should possess, and in many cases must possess, enduring value – meaning the asset you include on the list is usually not a flash in the pan asset or a fashionable trendy asset. It is a long-term asset you believe your family will enjoy owning for decades.
This might mean it takes more thoughtfulness and discussion with category experts about the asset.
The idea behind a wish list is to create one when life offers you a calm environment. It is NOT recommended to create a wish list when chaos is present, when you are mad or upset about something (including the stock market), or when a family situation is front and center. We have often discussed that emotions are usually the enemy of intelligent decision-making. So, creating a wish list is most productive when you are calm, can think clearly, and can consider what the future has in store for you and your family.
One useful tip is that a wish list can include almost any investment you might consider. We have helped families create significant wish lists in retail real estate, commercial real estate, and certain stocks and bonds. I have seen wish lists that include collectibles, yet that is significantly outside of my expertise.
In summary, a wish list is a written summary of assets you would like to own if they were priced at levels you consider valuable to your family.
Slide 5
So, this brings us to the next logical question – why does anyone need a wish list?
And the first-order reason is that it encourages you to actually create a list defining the assets you want to, and plan to own, when the prices are attractive. Creating the list tends to infer more than a passing thought – it is more of a commitment – which makes you think long and hard about the decision.
The second order reason is that it forces you to calmly yet with reflection, look into the future and build some scenarios that are realistic and even likely. This type of planning is really helpful and has been the source of wealth building for many.
And as you know I am always a fan of including the thought process of “What Happens If I am Wrong” analysis – as the future is unpredictable at best, and unknowable at worst, and it is always thoughtful to have a plan “B” or a plan to make lemonade from lemons if the future does not unfold as you thought when you put the list together.
Another significantly valid reason to build a wish list is because actually going through the process encourages intelligent investing – rather than – spur of the moment speculation based on what someone told you or what you heard on TV or read online today.
Think about buying a real estate property either retail or a commercial office building – you are probably going to own this asset for 20 plus years… this is the type of thinking that is pivotal when building a wish list.
So, next up is when should you pull out the wish list and either edit the wish list by adding to it or deleting something because the world has truly changed.
Keep in mind that as life changes, a wish list changes.
Let’s take a minute and find out if there are any comments or questions about what we have covered so far.
Slide 6
So, when does an investor need a wish list?
Certainly, the first instance that comes to mind is when the asset categories are all overvalued. Paying current market prices would mean that most—and possibly all—of the future appreciation would be pulled forward, allowing the seller to realize the next 5-10 years of appreciation in the current asking price.
In this situation, the wish list acts as a governor or a discipline machine. It reminds you that when you were calm and collected, you valued this specific asset at ($X), and that was a fair value when you were at peace with the world. Thus, paying more than your estimate at that time would be unwise unless the information regarding the asset’s valuation has changed.
The next time you will find a wish list helpful is shortly after a tumultuous downturn in the stock market, bond market, or real estate market.
The wish list serves as a reminder that, when calm and collected, you believed a specific asset would deliver above-average value in the future. Furthermore, you believed that this asset would provide lasting value and grow at rates surpassing inflation for decades to come.
You believed that the asset would survive turmoil and either deliver significant and increasing cash flow, appreciation, or both. Given that the asset is now reasonably priced, you need to take action or have a good reason NOT to act. This decision-making period is often incredibly difficult, as it looks like the world is going to end… However, these are the points in time where the most intelligent investments are made, and these are the points where the most foresightful acquisitions are made.
Consider the emergence of everything digital as the internet came into existence in the nineteen-eighties. It was evident to every investor that the future would evolve in a more connected manner and that productivity would rise on a global scale. The challenge, of course, was that many of the companies creating our future were selling at prices that already aggregated 10-20 years of growth estimates, which were either unreasonable or unachievable (or both).
Those investors who created a wish list in the late 1990s had to wait through several years of gut-wrenching increases in the prices of their chosen wish list candidates. The current wish list prices increased almost daily. Those price increases convinced the vast majority of investors that they had made a mistake by not paying the ridiculous asking prices at that moment.
Yet as always, intelligence overcame speculation and those companies selling at 100 times “estimated” earnings declined in price to 15 times earnings, dealing the speculators significant losses and delivering to those with a wish list a smorgasbord of incredibly attractive companies who would create the bedrock of the future for the corporate world as we know it today.
One well quoted example is Amazon. Those prescient enough to calmly think about the efficiency or on-line shopping (for more than books) with the breadth of goods and services available on-line, and who included it on their wish list, had several opportunities to buy this company at a bargain. Why? because Amazon, on its way to being the king of retailing lost over 90% of its value at least 3 times during the last 25 years.
In summary, an investor needs a wish list when asset values are much too rich to allow you to purchase the asset and receive what you believe would be better than a reasonably acceptable return.
A wish list is also necessary when the world is in decline, as it reminds you of the assets you want to own for the long term, even though current prices are too high.
We will acknowledge that implementing a wish list during times of significant economic uncertainty or change is challenging—and during geopolitical turmoil, the stakes may feel magnified tenfold. Yet, this is precisely when the value of sitting down and creating a wish list becomes incredibly useful. It helps you recall what you were thinking when you felt calm and at ease, facilitating more intelligent decisions during exceptionally difficult times.
Matt, that was longer than expected, so let me check in with you to see if there are topics I have overlooked.
Slide 7
So, how does one create a wish list?
This is the difficult part, and this is the fun part at the same time.
Our advice is to begin with the idea of owning assets that will be necessary and utilized indefinitely. Naturally, circumstances evolve, and so can you, but you must have confidence that this product or service will remain in demand over the long term.
Consider Warren Buffett’s portfolio: Coca-Cola, utilities, railroads, and energy—all of which may eventually become obsolete, yet each has had an incredibly long lifespan and could continue well into the future. Some categorize these asset classes as “boring” yet profitable and needed forever.
Another concept many overlook is that the assets you include in your list must have a strong balance sheet and pay dividends.
Why is this important? Over time, as you wait for your value to compound, you should be collecting a part of the value your asset is creating. This concept has several incredibly valuable dimensions.
First, only high-quality companies can pay dividends; only highly profitable and highly stable companies can do so.
Owning high-quality, stable companies is important when making a real, strategic, long-term investment rather than a speculative trade.
Think about a real estate investment. Would you purchase a real estate property with no rental income or cash flow (meaning you bought the property with the sole intent of gambling that it would appreciate)?
Finally, it’s wise to document the assets that make up your wish list and the reasons for choosing each specific asset. Documenting your wish list and the rationale for including each asset helps you recall the circumstances influencing your reasoning over time. As circumstances change, so too may your wish list. If there’s one certainty in life, it’s that uncertainty patiently awaits us during each economic cycle. The only real certainty is uncertainty.
For example, some families may relocate from one state to another, possibly removing previously local real estate purchases from their wish list.
Another reason supporting the documentation of your reasoning behind adding each specific asset to your wish list is to include our usual ending thought – which is an unpleasant one, yet one that must always be included. What happens if I am wrong?
If a wish list item is wrong, and it is so large or so dominant that it could threaten your family’s future, careful consideration and research is a must. It doesn’t mean that you don’t follow through with the item’s addition to the wish list, it just means you are able to survive the consequences of being wrong in the unlikely circumstances that you are wrong (and this also supports the necessity of having a dividend or free cash flow generation coming to you during your holding period).
The footnotes below1 provide an example of publicly traded companies that make a wish list.
1 The wish list below is a bit unique as it would be used in our portfolio allocation as a Private Equity diversifier. What we mean by this is that our personal reasoning behind owning this list of biotechnology companies is that, because the vast majority of them are losing money, they are similar in nature to a Private Equity investment. There are no dividends scheduled in the near future. These companies will have one of 3 outcomes. A) They will be taken over by another larger pharmaceutical company with an interest in the specific biological asset class focused on by the company’s science; B) the science will be proven wrong and the company will go bankrupt; C) the company’s science will be proven right and the company will choose to produce the drug, market the drug, and become a real operating company (in which case the company will likely be valued at many times its cash value, and often many times its earnings).
The outcomes outlined in A), B), and C) above are eerily similar to those for Private Equity investments, with one glaring positive exception: each of the companies above is public. This means you are likely to have instant liquidity if the future changes make the company more/less valuable (investors don’t have to wait 10-20 years for an outcome, typically the gestation period for a private equity investment, although some do come sooner).
Additional positives: a) The public company can raise funds without returning to private markets by either selling new shares (which is dilutive) or raising debt (which is not dilutive). b) Each of the companies, as well as the sector in general, is likely to benefit from the ongoing Artificial Intelligence revolution. As we have discussed multiple times in our previous “First Friday” webinars, business models that address a “one-to-many” challenge are poised to thrive. The main challenge for biotechnology lies in finding receptor sites, editing genetic DNA, or identifying a specific solution to a malady while minimizing the toxicity of that solution. Many of these challenges can be simplified as “one-to-many” challenges. This wish list is intended to be implemented as a single list, meaning all companies should be acquired simultaneously. Why? Because the likelihood is that some of these companies will succeed while others will not. Those that succeed are expected to be valued at 10-100 times their current worth, whereas those that fail could end up worth $0.00. Some may still retain some residual value for valid patents that are worth owning. Some items on the wish list will possess both—promising futures AND valuable patent rights that can serve as launch pads for future drug discovery.
The ability to buy these companies at or below cash value, with the reality that each of these companies has significant revenue generation, indicates that there is demand for their research/product/service or scientific collaboration, which provides another positive over the Private Equity market in our opinion.
| Company Name (Ticker) | Recent Price (As of 4/7/2025) | Price Change During the Last 52 Weeks | Current Enterprise Value (In millions) | Cash On Balance Sheet (in Millions) | Expected 2025 Earnings | Main Biological Drug Target |
| Structure Therapeutics (GPCR) | $16.33 | -59.2% | $936 | $884 | -$1.17 | Oral GLP-1 |
| Ginkgo Bioworks (DNA) | $5.70 | -89% | $331 | $562 | -$6.15 | Synthetic Biology |
| Editas Medicine (EDIT) | $1.12 | -83.7 | $93 | $269 | -$1.60 | Gene Therapy |
| Rezolute (RZLT) | $2.74 | +15% | $166 | $105 | -$0.95 | Hypoglycemia |
| Fate Therapeutics (FATE) | $0.68 | -90% | $76 | $307 | -$1.54 | Lupus |
| Nuvation Bio (NUVB) | $1.66 | -54% | $562 | $503 | -$0.57 | Lung Cancer |
| Foghorn Therapeutics (FHTX) | $3.15 | -56% | $175 | $244 | -$1.20 | Lung Cancer |
| Moderna (MRNA) | $28.70 | -74% | $9.9 | $9.5 | -$10.21 | Cancer and COVID-19 |
| Vaxcyte (PCVX) | $30.58 | -53% | $3.9 | $3.1 | $4.52 | Pneumonia Vaccine |
| BioNtech (BNTX) | $92.01* | +1.4% | $21.9 | $18.8/($21.8)* | -$4.75 | COVID-19, and Cancer |
*This daily price was before Bristol Meyers committed $3.5 Billion to BNTX for a collaboration with their cancer program. The value of their cash position has been updated to include $3 billion of the $3.5 billion commitment by BMY.