In March 2019, I had a simple problem. I’d received stock option grants from a couple of companies and wanted to see what they’d be worth under different vesting schedules and stock price scenarios. The spreadsheet I was using was getting unwieldy. So I spent a weekend building a small web app to replace it.

Suppose you are a believer in the philosophy of value or focus investing. In that case, you inherently understand that market prices don’t always equate to the intrinsic worth of a company. Thus, market prices often fall short as a reliable yardstick for assessing a company’s real-time performance. This begs the question, what, then, should be your golden benchmark? The answer is simple: Look-Through Earnings.

“If you don’t get this elementary, but mildly unnatural, mathematics of elementary probability into your repertoire, then you go through a long life like a one-legged man in an ass-kicking contest.”
– Charles T. Munger

If you’re like me when I started learning how to invest, I knew I should know how to use probabilities in my process but I thought it would come later. I seemed to find so many investors who talked about its importance, but few actually demonstrated how to use them.