Investing Tip: If You Can’t Say It in One Line, You Don’t Have a Thesis

Most people don’t have a thesis
Most people don’t have an investment thesis. They have a story they like and a ticker they’re emotionally attached to. They convince themselves they “did the work” because they read a few articles and watched a YouTube video.

The one-sentence rule
I keep it simpler than that. For every position I own—or even think about owning—I want one clean sentence in plain English: “I own X because Y drives Z over the next N years at a price that still makes sense.” If I can’t write that without tripping over myself, I don’t understand the business well enough to put real money into it. Full stop.

How people blow themselves up
What usually shows up right before people blow themselves up is the ramble. They start “explaining” their idea and you get ten different angles of “optionality,” five macro takes, and a fantasy about how the market will wake up and reward them. That’s not a thesis. That’s a pitch.

What a real thesis sounds like
A real thesis is boring and specific. “I own this because FCF per share is compounding, management returns cash, and the multiple isn’t stupid.” That’s a thesis. You can argue with it. You can size it. You can kill it if one of those pieces breaks.

A real example, not theory
Here’s one of mine: “I own MSFT because cloud margins expand as Azure scales, buybacks shrink the share count, and I’m paying around 25x for earnings that are still growing double digits.” That’s it. If Azure growth stalls or the multiple blows out into fantasy land, I revisit. No miracles required.

The miracle-chain red flag
What I don’t want is something like: “Well, if rates do this, and AI does that, and the Fed maybe pauses, and also emerging markets recover, and the CEO executes this pivot, and sentiment improves…” If your thesis relies on a chain of miracles, it’s not a thesis; it’s a wish list.

My test for myself
The test I use is simple. If I need more than one sentence to say why I own it, I probably shouldn’t. If I can’t say what actually drives revenue, margins, and free cash flow without opening a transcript, I’m not ready. If I’m explaining the stock more than the business, I’m already off track.

This is about accountability
This is not about being clever. It’s about being accountable. A one-line thesis gives you something you can come back to a year later and ask, “Did this happen or not?” If the answer is no, you don’t get to hide behind stories or macro excuses. You were wrong. Fix it and move on.

What to do before you hit buy
Next time you’re about to hit buy, don’t open a new tab. Open a blank line. Write the one-sentence reason you own—or want to own—that name. If it’s sharp, specific, and testable, you’ve earned the right to do more work. If it’s mush, close the ticket.

You don’t need more ideas. You need fewer, clearer ones.