What is an investment thesis?

An investment thesis is a document that articulates the expected performance of an investment and outlines the rationale behind it. This typically includes an analysis of the investment's potential risks and rewards, the market conditions that may impact its performance, and the reasoning for selecting that particular investment.

By providing a clear framework and justification for why an investment is believed to be worthwhile, the investment thesis serves as a guide for making informed decisions and aligning them with overall investment goals. It integrates various aspects of an investment, including qualitative and quantitative analysis, to support predictions about its future performance.

In this context, while analyzing market trends, understanding a company's financial health, and developing diversification strategies are important components of investment decision-making, they do not encompass the comprehensive nature of an investment thesis, which specifically focuses on justifying a particular investment decision based on its projected outcome.