Position Recovery Decision

You are down {X}% on {COMPANY} ({TICKER}). Use this framework to decide:
AVERAGE DOWN or CUT THE LOSS?

1. THESIS INTEGRITY CHECK (most important question)
   - Is your original investment thesis still intact?
   - Has any new information emerged that invalidates a core assumption?
   - Classify: Thesis INTACT (stock down on noise) / Thesis BROKEN (fundamentals changed).
   → If thesis broken: CUT immediately. Do not average down into a broken thesis.

2. WHAT HAS ACTUALLY CHANGED?
   - Company-specific: earnings miss, guidance cut, competitive loss, management change?
   - Macro: sector rotation, rate shock, liquidity crunch?
   - Sentiment-only: market-wide selloff with no stock-specific news?
   → Sentiment-only declines with intact thesis = potential add opportunity.

3. POSITION SIZING DISCIPLINE
   - What % of portfolio is this position currently?
   - If you average down to your maximum position limit, can you handle further downside?
   - Never add to a position that would take you above your max single-name limit.

4. OPPORTUNITY COST
   - Is this the best use of capital right now vs. other ideas on your watchlist?
   - Are you averaging down out of conviction or out of ego / loss aversion?

5. EXIT CRITERIA (pre-commit before deciding)
   - If you add here, what specific event triggers an unconditional exit?
   - Set a hard stop: if stock falls another X%, you exit regardless of thesis view.

6. DECISION
   - AVERAGE DOWN: only if thesis intact + within position limits + best use of capital.
   - CUT: if thesis broken OR position already at max limit OR better alternatives exist.
   - HOLD (no action): if uncertain — do nothing until clarity improves.