Investment thesis template for stock investors

Use this template to record why you are buying a stock, what evidence supports the thesis, what could invalidate it, and when to review the position.

• Before buying a stock or adding it to a serious watchlist.
• When an old position no longer has a clear written reason.
• Before a major review where you need to separate thesis from price emotion.

Copy this template

1. Core thesis

• I am interested in this stock because...
• The business outcome I expect over the next 2 to 5 years is...
• The main driver of return should be...

2. Assumptions and evidence

• The thesis depends on these 3 to 5 assumptions...
• The strongest current evidence is...
• The evidence I still need to check is...

3. Risks and disconfirming signals

• This thesis weakens if...
• This thesis breaks if...
• The source or metric I will monitor for each risk is...

4. Action and review plan

• Initial action: watch, buy, hold, add, trim, or exit.
• Position size or max size rule...
• Next review date and trigger...

Filled example

Fictional sample only: Northstar Components, a mid-cap industrial supplier. This is not investment advice.

Core thesis

Northstar may compound cash flow if automation demand keeps growing and service margins remain above historical levels.

Key assumptions

Service attach rate rises, customer concentration falls, and backlog conversion stays steady.

Disconfirming signal

Two quarters of falling service margin with management blaming structural pricing pressure.

Review plan

Review after the next earnings report and again if backlog drops more than 10% year over year.

How to keep the template useful.

• Compare new evidence against the assumptions, not against your mood about the stock.
• Label thesis status as intact, strengthening, weakening, or broken.
• Write the action you considered and why you accepted or rejected it.