Most investment notes are post-mortems with the labels swapped. They document what occurred, what the stock did, what the quarter showed — but almost nothing about the thinking that preceded the decision. When you review those notes later, you can't learn anything useful from them. You can't tell whether you were right for the right reasons, wrong despite good reasoning, or simply lucky.
The fix is to capture six specific things before you act, not after.
1. The thesis in one sentence
Write the core belief driving the decision in a single sentence. Not a paragraph, not a bullet list — one sentence.
If you cannot do this, you do not yet have a thesis. You have a collection of facts you find interesting.
A thesis sounds like: "The market is pricing this company as a mature commodity business, but its software segment is growing 40% annually and will be the majority of revenue within two years." That sentence contains a gap between current pricing and your view of future reality. That gap is the investment.
Everything else in your notes should either support or challenge that sentence. If a piece of information doesn't connect to it, cut it.
2. The kill conditions
Write down, right now, what would prove you wrong.
This is the hardest item on the list and the most important. Once you own a position, your brain will work against you — a documented phenomenon called confirmation bias. You will seek out information that supports the thesis and discount information that challenges it.
The antidote is to define the falsification criteria before you have skin in the game.
Example: "If the software segment's growth rate drops below 20% for two consecutive quarters, the thesis is broken regardless of the overall revenue number." That's a kill condition. When it triggers, you are not allowed to keep holding on the original thesis. You need a new one or you need to exit.
Investors who skip this step find themselves holding losing positions long past the point where the original thesis was clearly wrong.
3. The base rate
Before focusing on this specific company, asset, or trade, write down what normally happens to things like it.
This is called the outside view, a term from decision-making research. Our brains naturally focus on the specific details of the case in front of us — the inside view — while ignoring the statistical track record of similar situations.
Ask: what fraction of companies with these characteristics outperform over a 3-year horizon? What is the typical outcome when the market is pricing a stock this way? What happens to high-growth software companies when interest rates rise?
You do not need perfect data. Even a rough base rate — "most companies in this situation underperform for at least 12 months before recovering" — is more calibrating than starting only from the specific case.
4. Your edge
Write down why your opinion is different from the market's, and why the market is wrong.
Markets are reasonably efficient. When you buy something, someone else is selling it, and that seller likely has access to the same public information you do. The question is not whether you have done research. The question is whether you know something the aggregate of other participants does not, or whether you are interpreting something differently, and why you believe your interpretation is correct.
Your edge might be: a longer time horizon than institutional investors who face quarterly reporting pressure; a specific domain insight about an industry you know deeply; a willingness to hold through short-term volatility that others cannot stomach.
If you cannot articulate your edge, you are betting that you got lucky with your thesis and the market got unlucky. That is not a repeatable strategy.
5. The time horizon
Write down when you expect to know if you were right.
A thesis without a time horizon is not a thesis — it is a hope. "This company will eventually be recognized as undervalued" is unfalsifiable. "Within 18 months, the software segment will represent more than 50% of revenue and the market will re-rate the multiple" is testable.
Time horizon matters for a second reason: it governs what information is relevant. If your thesis is a 3-year structural story, quarterly earnings noise is irrelevant. If your thesis is a 6-month catalyst play, structural trends are mostly irrelevant. When you're clear on the horizon upfront, you know which data points to track and which to ignore.
This also sets a natural review date. Put it in your notes. When it arrives, re-read your original thesis. Did the thesis materialize? Did it not? Was your reasoning sound, regardless of the outcome?
6. The decision log entry
Record what you decided, why, and on what date — before you execute.
The date matters more than people realize. It is the timestamp that separates your pre-decision thinking from your post-decision rationalization. Without it, you will unconsciously revise your memory of what you believed to match what actually happened — a well-documented cognitive error called hindsight bias.
The format is simple: the date, the decision (buy / hold / sell / pass), the size if relevant, and a one-paragraph explanation of the reasoning at that moment. Not what the market did. Not what happened last quarter. What you believed and why, on that specific day.
Try this today: Pick one position you currently hold. Open your notes and try to write the six items from memory — thesis, kill conditions, base rate, edge, time horizon, and decision log entry. Notice which ones you cannot write. Those are the gaps in your pre-decision process. Start capturing them on your next trade.
JustJot's research workspace keeps these six fields as a template so you can fill them before you execute, not reconstruct them afterwards.