Preference vs Thesis
The distinction between a taste (a list of things you like the sound of, which cannot be wrong) and a thesis (a claim about the world that could be shown to be false).
Example
"I like fintech" is a preference. "Fintech wins on distribution because the buyer has no procurement process, and I am wrong if the category leaders in three years sold top-down" is a thesis.
Important
A preference can never reject an opportunity, because there is no standard to fail. The test is whether your stated thesis has ever cost you something you wanted to do.
Related terms
- Investment thesis — A written statement of what you believe about an investment, at what price it is worth owning, and what specific observation would tell you that you were wrong.
- Falsifiable claim — A statement specific enough that some future fact could show it to be wrong.
- Anti-Thesis — The written list of categories an investor has decided in advance not to invest in, each with the reason and an explicit exception clause.
Lessons that explain it
All 578 terms in the Investing glossary