Some Helpful Excel Files - Addition/Subtraction Of Funds PUT Hedge And A DCF Variables Spreadsheet

The PUT hedge is incredibly important to get right. It requires time and accuracy to review your portfolio to make sure you got an accurate idea of how you are going to trade your account. If you do not trade your investment account correctly you could be over or under protected when it comes to equity downside. I am able to trade and take bigger risks than what an ordinary manager might be willing to take because I know I have the insurance (PUTs) to protect me from catastrophic market loss. Mark Cuban talks here about how PUTs protected him in the dot com crash of 2000: https://finance.yahoo.com/news/mark-cuban-genius-money-move-110103811.html

Let me also give you an insight into some of my trading strategies. 1) I like to have dry powder around. Dry powder is cash or highly liquid securities like T-Bills. We can debate or discuss the percentage of what you should have as reserves on the sidelines but at the end of the day having extra cash to deploy in times of distress can be a great thing because you can buy companies or a collection of companies at rock bottom prices or pretty close to it. Take for example 04/03/2025, if you go back to my blog post I mention this being a buying opportunity in the market. If you had deployed lets say $100,000 at the time into QQQ or TQQQ and hedged yourself you could be up anywhere between 28% to 90% after the hedge costs. I would have taken some gains and re-hedged again between then and now so lets call it 25-80%. You would have approximately $125,000 to $180,000 dollars right now in account value. Part of getting ahead in the markets is avoiding the pitfalls and buying during huge sell offs that are oversold. My strategy and my PUTs give me the confidence to trade with prudent risk management in the markets. We get a 10% market correction about once a year and we get a 20% of greater correction once every 3-7 years. Knowing that it is not just an advisory statement to have equity protection, it’s a necessity, especially when you are trading something like TQQQ.

The DCF (discounted cash flow) variable spreadsheet offers a quick way to review or look at a company and determine a couple of things, an example is as follows.

Row two percentages: return I want to receive over a certain time period… 10, 12, 14, 16, 18, 20 years.

Row three percentages: growth rate I expect my company to grow at over a certain time frame… 10, 12, 14, 16, 18, 20 years.

Row four percentages: growth rate I expect my company to give me until perpetuity or death of the organization. I assumed 50 years for a lifespan of the company.

PV 10, PV12, PV14, PV16, PV 18, PV 20: These stand for present value and a time period. Below is an example of how I would use this document.

If I demand a return of 10% on my investment and I expect to hold the investment for 12 years and I assume a growth rate of 8% with a growth rate in perpetuity of 2% after 12 years how much am I going to be willing to pay for Coca Cola (KO) in order to get my return of 10%? I will use real time data as of 9.24.25. I have adjusted my spreadsheet for column D and put in 10% on row 2, 8% on row 3, and 2% on row 4. When I do that I get a present value (PV) of 18.8. That means I can get my return of 10% at the following growth rates I mentioned if I buy at a P/E at or below 18.8. The P/E of KO as of today 9.24.25 is 23.57. This means based on the growth rates and present value of the company I would not get my 10% return. If I believed KO might grow faster than 8% i could change the 8% to a 11% for example and that would give me a new PV value of 23.5 which matches the P/E of today essentially. If I believed KO could grow at 11% for the next 12 years and then in perpetuity after that at 2% I would be willing to pay 23.5 times earnings.

Howard Marks talks a lot about valuation, I would watch a couple videos of him to start. He is really smart and informative. I personally learned about valuation through a couple different avenues, those being: My MBA, old job, reading, practicing excel and valuation modeling, and being a student of the craft.