A memo is a record of reasoning at a moment. When facts change, add a dated amendment rather than editing the original, so the evolution of your thinking stays visible and reviewable.
10 min read · Level 4
The temptation to tidy a memo is strong precisely when it matters most - after the assumption you leaned on turned out to be wrong. I think resisting that, and instead adding three honest lines with a date, is the difference between a document that teaches you something later and one that simply agrees with whatever you now believe.
A memo written before an investment states what you believed and why. Its value at review depends entirely on it still saying what you actually believed at the time.
The discipline is simple:
Do Do not Add dated amendments below the original Edit the original text Record what changed and what caused it Remove assumptions that proved wrong Keep every version accessible Keep only the current version
What should trigger an amendment:
Trigger Example A load-bearing assumption fails the market grew far slower than assumed A material new fact a key customer left, a competitor entered A change in your own view you no longer believe the original thesis A follow-on decision the reasoning for investing more or declining
An amendment can be three lines: the date, what changed, and what it means for the original case. The point is not thoroughness; it is that the record of your thinking remains continuous and honest.
At review, a memo with four dated amendments is far more useful than a polished single document. It shows which assumptions were fragile, how quickly you noticed and whether you acted.
Because memory reshapes belief toward whatever happened. Without dated amendments, you will recall having had doubts you did not have, or conviction you did not hold.
It also makes follow-on decisions better. When a company asks for more money, the dated history of what you believed and what changed is the most relevant document you have.
Educational, not personalised financial advice. Nothing in the Investor Academy is a recommendation to buy, sell or hold anything — what is right for you depends on your own circumstances and the rules where you live.
A memo with amendments over two years.
Date Entry Original Invested on the thesis that clinics buy through office managers +4 months Amendment: two of three new customers bought top-down. Assumption weaker than stated. +11 months Amendment: company hired an enterprise sales lead; motion has changed from original thesis +18 months Amendment: growth strong but through a channel I did not predict. Right outcome, wrong reason. +24 months Follow-on declined: my original edge does not apply to the company it has become
At review the investor could see that their thesis had been wrong within four months, that the company succeeded anyway, and that they had recorded it rather than reinterpreting the win as validation.
Editing a memo to reflect current understanding, which destroys the only record of what you actually believed when you decided.
Treat the first version as fixed, and append amendments below it.
Record when you noticed, not only what you noticed.
Link each change to a specific load-bearing assumption from the original memo.
Keep the reasoning for investing more, or declining, with the original case.
Whenever a material fact changes about a company you have invested in.
Do not amend for routine fluctuations. Amendments are for changes that affect the reasoning, not for ordinary quarterly variation.
Institutional investors commonly maintain written records of investment decisions and require periodic written updates on positions, preserving the original approval documents rather than replacing them, so that decisions can be reviewed against the reasoning available at the time.
Preserving the original and appending updates is standard institutional practice, and it works the same way for individuals.
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