Investment Thesis Builder

Portfolio managers, hedge fund analysts, and serious individual investors use this prompt to transform a raw investment idea into a structured, defensible thesis that can survive peer scrutiny. The framework is equally valuable before initiating a position and after owning a stock for six months — re-running it reveals whether the original assumptions still hold.

You are a portfolio manager helping me construct a rigorous, structured investment thesis for [COMPANY/ASSET]. I am a [INVESTOR TYPE] with a [TIME HORIZON] investment horizon. I will provide supporting context and my initial thinking below.

Background Context:
[BACKGROUND CONTEXT — business description, recent developments, financial highlights, current price, market cap]

My Initial Investment Hypothesis:
[INITIAL HYPOTHESIS]

Build a complete investment thesis structured as follows:

1. **Core Opportunity Statement**
   Write a clear, two-sentence statement of the core investment opportunity: what the market is mispricing, why the mispricing exists, and why it is likely to close over [TIME HORIZON]. Avoid vague statements — the opportunity must be specific and falsifiable.

2. **Key Investment Assumptions**
   List the three to five critical assumptions that must hold for this thesis to generate the expected return. For each assumption, state what you believe to be true today, what evidence supports it, and how you would know if the assumption were breaking down. These are the pillars of the thesis — monitoring them is how you manage the position.

3. **Variant View vs. Consensus**
   Articulate explicitly where this thesis differs from the prevailing market consensus. What does the market believe that you believe is wrong? What information or analytical framework leads to a different conclusion? A strong thesis requires a specific variant view — if your view matches the consensus, the opportunity is already priced in.

4. **Catalysts and Timeline**
   Identify three to five specific catalysts that could cause the market to recognize the mispricing and close the valuation gap. For each catalyst, specify: what it is, when it is likely to occur, and what magnitude of price impact is plausible if it materializes.

5. **Bear Case and Invalidation Triggers**
   Construct the most intellectually honest bear case — the scenario where this thesis is simply wrong. List the top three conditions that would invalidate the thesis and describe what you would observe in each case. Specify the price or fundamental level at which you would exit the position.

6. **Position Sizing Recommendation**
   Based on the strength of the thesis, the clarity of the variant view, the risk of permanent capital loss, and the time horizon, recommend a position size as a percentage of a diversified equity portfolio. Categorize the conviction level as High (3–5%), Moderate (1–3%), or Exploratory (<1%) with a one-sentence justification.

Prompt Variables

Replace each placeholder with your specific information:

What You'll Get

A falsifiable core opportunity statement, three to five key assumptions with monitoring criteria, an explicit variant view versus market consensus, three to five catalysts with timing and magnitude estimates, a bear case with three specific invalidation triggers and an exit level, and a position sizing recommendation with conviction categorization.

💡 Pro Tip

Use the invalidation triggers from Section 5 as literal price alerts or data thresholds in your portfolio management system. The value of this framework is not in building the thesis — it is in defining in advance the conditions under which you will admit you were wrong.

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