Investment Thesis

How do you develop conviction worth acting on?

A thesis is a falsifiable story about where value will accrue. Without one, you're gambling. With one, you're making a decision you can learn from.

The Practice

Weekly research block (3-5 hours):

• Pick one thesis to develop or stress-test
• Read primary sources — whitepapers, on-chain data, founder interviews — not summaries
• Document reasoning before buying. Howard Marks: "If you didn't write it down, you didn't think it through."
• Score conviction: HIGH (verified evidence), MEDIUM (strong reasoning), LOW (assumption), NONE (guess)

Pre-mortem before every position:

• Imagine it's 12 months later and this investment failed
• Write down the three most likely reasons it failed
• If you can't name them, you don't understand the risk

Seven-Step Process

1. Market context — Macro environment, cycles, rates, geopolitical forces
2. Industry dynamics — Growth trajectory, competitive landscape, barriers to entry
3. Opportunity identification — What's underserved, mispriced, or structurally shifting?
4. Strategic fit — Does this align with your portfolio strategy and knowledge edge?
5. Core statement — One sentence: "I believe [X] because [evidence], which means [outcome] by [timeframe]"
6. Risk assessment — What kills this? Regulatory, technical, market, team risks
7. Viability check — Given all above, does expected return justify the risk?

Conviction Checklist

Before committing capital, score each:

• Catalyst identified — what trend or event drives this opportunity?
• Position articulated — why this specific asset benefits from the catalyst
• Biggest risks named — what would guarantee failure?
• Conviction level set — 1-5 with specific evidence for each point
• Thesis statement written — 1-2 sentences, falsifiable, time-bound
• Exit strategy defined — what triggers sell, what triggers add
• Review cadence set — when do you revisit this thesis?

Ray Dalio: "Write principles for recurring decisions. When the same situation arises, you shouldn't be starting from scratch."

Bayesian Updates

Successful thesis evolution requires holding conviction while remaining open to disconfirming evidence. Refer to Todd Simkin on Bayesian decision-making.

• New information changes the probability, not the framework
• Update conviction scores quarterly with specific evidence
• Track which assumptions held and which broke
• Be prepared to abandon the thesis if fundamental assumptions prove incorrect

Dig Deeper

• DePIN Investment Appraisal — Gold standard: 10-point evaluation checklist with weighted scorecard
• AI Agents Thesis — Autonomous agents capturing blockchain transaction value
• Tokenomics Value Model — How protocol revenue actually works
• Equity Investing — Fundamental analysis checklist for traditional markets

Context

• Predictions — Score your conviction
• Convictions — Earned vs borrowed belief
• Portfolio Management — Putting thesis into practice
• Blockchain — EVM vs SVM vs Move

Links

• Creating an Investment Thesis
• Investment Thesis Frameworks

Questions

What separates a thesis that compounds from one that merely sounds right?

• If you can't write your thesis in one falsifiable sentence, do you actually have a thesis or just a feeling?
• When new evidence contradicts your thesis, what's your actual process for updating conviction — or do you just hold harder?
• Which step of the seven-step process do you consistently skip, and what has that cost you?