Investment thesis template: what to write before you buy a stock

Five lines. Fill in every one before you buy.

• Call: I'm bullish / bearish on [ticker] at [price] on [date].
• Why: The market thinks [what the price assumes]. I think [what you see differently], because [evidence].
• What would make me wrong: If [specific, checkable event] happens, my reasoning failed.
• Time frame: I expect this to play out within [under 1 month / 1–6 months / 6+ months].
• Conviction: Low / medium / high.

A weak thesis

“Bullish on a chipmaker. AI is the future and they make the best chips.” Everyone knows this, so the price already reflects it. Nothing here could turn out to be wrong.

A stronger one

“Bullish at today's price. The market prices in data-center revenue flattening next year; orders from the three largest cloud companies point to another year of growth. I'm wrong if two of them cut their capital spending plans in the next two earnings calls. 6+ months. Medium conviction.”

The second one can be checked. In six months you'll know whether the orders came, whether spending was cut, and whether the price moved for the reason you gave.

Investors who can't name what would change their mind tend to hold losers too long. They find a new reason each time the old one fails. Naming the condition in advance turns “it's down, but I'm still right” into a yes-or-no question.

Good conditions are specific and can be checked from public information:

• Gross margin falls below a number you name
• A product launch slips past a date
• A competitor wins a named customer
• Revenue growth drops below a rate for two quarters in a row

A thesis you can quietly rewrite later is worth less than one you can't. On SoFo, each position has this structure built in: direction, reasoning, what would make you wrong and a time frame, with the price and date locked when you post. See also how to keep an investing journal.