What belongs in an investment thesis?
A thesis connects an investment claim to evidence, a price, and conditions that could make the claim wrong. It should explain why an outcome matters for the investment, rather than only describing a product you like.
Record the main assumptions, an alternative use of the money, and a plan to revisit the decision. The aim is to make the original reasoning visible when new evidence arrives.
A hypothetical thesis example
This example uses a fictional business, ExampleCo. It is an illustration of structure, not a recommendation or a valuation.
- Belief
- Renewal revenue could grow faster than assumed in my valuation. I need to compare this with the expectations implied by the price.
- Evidence to seek
- Customer renewal disclosures, revenue quality, and the assumptions in my own valuation model.
- Assumption
- Renewals remain strong without a material increase in acquisition or service costs.
- What would change my mind
- A sustained decline in renewal rates or evidence that retaining customers requires spending beyond my original assumptions.
- Alternative
- Compare the expected outcome, risks, and costs with a diversified fund and with waiting for more evidence.
- Review
- Revisit after the next results release, comparing new information with the assumptions recorded today.
Make the thesis falsifiable
“The company is great” is hard to test. “Renewal revenue will grow without higher service costs” is a claim you can check against later disclosures. The evidence may still be incomplete, but the claim has a clearer failure condition.
Keep a copy of the original memo. When you review it, distinguish new information from a change in your own reasoning. Rewriting your original assumptions can hide what you learned.
Frequently asked questions
How long should an investment thesis be?
Long enough to state the claim, evidence, main risks, and review conditions clearly. This template favors concise answers; it is not a substitute for research or a valuation.
Does completing the checklist mean I should invest?
No. Completion only records your reasoning. It does not verify the evidence, estimate fair value, or judge whether an investment fits your circumstances.
Are my answers saved or submitted?
The template does not submit your answers to a server or save them across reloads. Copy your memo to keep it.
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