Decision quality = Evidence × Repeatability × ReviewA written memo is the only defense against your future self. If the written reasons still stand, hold; if they break, sell — feelings get no vote.
Investment Memo Template
A one-page memo structure that forces a complete argument: what the business is, why it is mispriced, what could kill the thesis, and what would make you sell. If you cannot fill every section, the research is not done. Educational structure only.
What this template contains
The memo has seven sections, ordered so the uncomfortable parts cannot be skipped: thesis in one sentence, business description, why the opportunity exists, valuation summary, key risks, pre-mortem, and exit conditions. The pre-mortem — imagining the investment has already failed and explaining why — is the section most investors skip and most regret skipping.
Fields in this template
- Header — company, ticker, date, price at time of writing.
- Thesis — one sentence stating the mispricing and why it will close.
- Business — what the company sells, to whom, and its competitive position.
- Why now — why the market is wrong and what your edge in seeing it is.
- Valuation — intrinsic value estimate, method used, margin of safety.
- Risks — the three most plausible ways this loses money.
- Pre-mortem — "it is three years later and this failed because ______".
- Exit conditions — specific facts (not prices) that would invalidate the thesis.
How to use it
- Copy the structure below after completing your valuation work.
- Write the thesis sentence first — if it takes a paragraph, it is not clear yet.
- Be specific in "why now": "the market is short-sighted" is not an edge.
- Write the pre-mortem honestly — it is for you, no one else will read it.
- Define exit conditions as facts about the business, then date and file the memo for future review.
Empty example structure
- COMPANY: ______ · TICKER: ______ · DATE: ______ · PRICE: ______
- THESIS (ONE SENTENCE): ______
- BUSINESS: ______
- WHY THE OPPORTUNITY EXISTS: ______
- VALUATION — METHOD: ______ · ESTIMATE: ______ · MOS: ______%
- TOP 3 RISKS: 1. ______ 2. ______ 3. ______
- PRE-MORTEM: ______
- EXIT CONDITIONS: ______
A memo's value compounds at review time: re-reading what you actually believed — not what you remember believing — is the only honest feedback loop in investing.
- 1What this template contains
- 2Fields in this template
- 3How to use it
- 4Empty example structure
| Shortcut | A one-page memo structure that forces a complete argument: what the business is, why it is mispriced, what could kill the thesis, and what would make you sell. If you cannot fill every section, the research is not done. Educational structure only. |
|---|---|
| Disciplined workflow | What this template contains → Fields in this template → How to use it |
1. What this template contains The memo has seven sections, ordered so the uncomfortable parts cannot be skipped: thesis in one sentence, business description, why the opportunity exists, valuation summary, key risks, pre-mortem, and exit conditions. The pre-mortem — imagining the investment has already failed and explaining why — is the section most investors skip and most regret skipping. 2. Fields in this template 3. How to use it 4. Empty example structure
True story · Michael Burry, 2005
A thesis is only real once it is written down
In 2005 Michael Burry concluded that subprime mortgage bonds would default at scale — and he did not just trade the idea, he documented it. His investor letters laid out, in writing, exactly what the bet was, why the market was mispricing it, what would kill the thesis, and what evidence would confirm it: loan-level default data, teaser-rate reset schedules, the works.
Then everything went against him. The bonds did not fall for two years; investors revolted and demanded their money back. What held the position together was the memo: the reasons on paper had not changed, so the position did not change. When the collapse came in 2007–08, his fund returned nearly 500% cumulatively. The investors screaming loudest had been refuted not by Burry's feelings but by his own written record.
A written memo is the only defense against your future self. If the written reasons still stand, hold; if they break, sell — feelings get no vote.
2005thesis written in advance
2 yrsof being early and doubted
≈489%cumulative fund return
True story · US Air, 1989
A confession Buffett kept retelling
In 1989 Buffett put $358 million into US Air preferred stock — drawn by the security's attractive terms rather than the business itself. Deregulated airlines were a commodity industry: brutal capital needs, no pricing power, profits competed away the moment they appeared. Dividends were soon suspended and Berkshire wrote the position down by 75%.
Buffett turned the episode into a running confession, joking that he needed a hotline — "I'm Warren, and I'm an aeroholic." A lucky upswing in the cycle eventually let Berkshire exit whole, which he insisted made the decision no less wrong.
A good structure cannot fix a bad industry. The moat question comes before the price question.
$358Minvested in 1989
−75%written down
luckwhat saved the exit
True story · Berkshire Hathaway itself
The best investor's worst investment
Berkshire Hathaway was a fading New England textile mill that Buffett bought into in the early 1960s because it was statistically cheap — and took control of in 1965 partly out of spite, after its CEO shaved an eighth of a dollar off a promised tender offer. For the next twenty years Buffett fed capital into newer looms while foreign competition ground prices ever lower.
No amount of good management could fix a commodity product with no moat. He finally closed the mills in 1985 and later called Berkshire "the dumbest stock I ever bought", estimating that the compounding forgone by not starting from an insurance company instead cost about $200 billion.
A low price cannot rescue a business with no moat. Knowing which problems are unfixable is what a circle of competence is for.
1965took control
20 yrsof fighting economics
≈$200BBuffett's estimated cost
Related tools
Frequently asked questions
How long should an investment memo be?
One page forces clarity. If the idea needs ten pages to sound convincing, the extra nine usually contain the doubts.
What makes a good exit condition?
A fact about the business, not a price. "Gross margin falls below X for two consecutive years" is testable; "the stock drops 30%" measures mood, not thesis.
Is this memo a recommendation?
No. It is a private research document for your own discipline. This template provides structure only, not investment advice.
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