What is breaks-if condition?
A breaks-if condition is the single fact you write down in advance that would prove your reason for owning a stock wrong. It turns a vague thesis into a testable one, in the spirit of a pre-mortem and inversion.
Also called: thesis falsifier, falsifiable thesis, what would break my thesis
Making a thesis falsifiable
A reason like "great company, strong moat" cannot be checked, because nothing would ever count as disproving it. A breaks-if condition fixes that by naming the disproof up front: "this pillar breaks if gross margin falls below 60 percent for two straight quarters," or "if the flagship contract is not renewed." Now the thesis can be tested against reality instead of defended forever.
This is falsification applied to investing. It echoes Charlie Munger's habit of inverting a problem (ask what would make this fail) and Gary Klein's pre-mortem (assume it failed, then explain why). Writing the breaks-if condition before you buy is the cheapest insurance against thesis drift, because the rationalizing brain cannot move the goalposts you already set.
Common questions
Why write down what would break your thesis?
Because once you own a stock, your mind invents reasons to keep holding. A breaks-if condition set in advance is a commitment device: it defines failure before you are emotionally invested, so you can recognize a broken thesis instead of rationalizing it.
See per-ticker breaks-if conditions: open it