Building conviction

Hey friends — Joe here.

💡 One Idea Worth Compounding lands every Tues. One framework, one book, one conversation — explained plainly enough to act on this weekend.

Nothing here is advice. Just how I think about it.

Two conversations this month, different people, almost the same sentence:

"I don't really have a view on any particular stock."

Both wanted to learn to sell options for income. Both assumed the missing piece was technique.

It isn't. The ones who stall don't stall on the mechanics. They stall because they have no conviction in a single company.

Selling a put is a promise to buy something. If you wouldn't want to own it at any price, then that's just gambling. In other words, it takes conviction to invest into a business.

Conviction isn't a feeling, or enthusiasm. Conviction is built through 3 simple steps of company research:

1. Build a Clear Investment Thesis: write down explicitly why you are buying the company, detailing its business model, competitive advantage, and how it makes money.

2. Identify Invalidation Triggers: A thesis that can't fail isn't a thesis. Name the thing that would make you sell, in advance, while you're calm.

3. Monitor and Re-evaluate: Nothing last forever. Follow the company's quarterly earnings to check if the company meets or misses its projected milestones and profitability levels.

This takes effort, which is why conviction can only be built, not borrowed. But AI has definitely made the whole processing of company research easier and more enjoyable. So technology is leveling the playing field.

Here's my question: can you name two companies you'd be pleased to buy more of tomorrow — and why? Hit reply and let me know. I read every one.

Keep growing!

Joe