Bear Case Builder

Use This Skill When

• The user wants a rigorous downside case, short thesis draft, or risk memo.
• The task is to challenge a bullish or consensus narrative without resorting to straw-man arguments.
• The work needs failure modes, probability-severity framing, and confirm-or-kill signals.
• The output should show how downside can happen, not just assert that it can.

Required Inputs

• company and, if available, ticker
• consensus or bullish narrative to challenge
• valuation context: current multiple, implied expectations, or market narrative
• operating sensitivities: demand, pricing, margins, customer concentration, balance sheet, capital allocation, regulation
• time horizon: tactical, 12-month, or multi-year downside case
• known evidence: past misses, industry risks, competitor threats, refinancing needs, or structural concerns
• If the evidence is incomplete, frame the bear case as scenario analysis with confidence labels and do not present speculation as a probable outcome.

Workflow

1. State the consensus or bullish view fairly and clearly.
2. Identify the assumptions that must hold for the bullish case to work.
3. Stress test those assumptions through concrete failure modes:
   • demand disappointment
   • margin compression
   • competitive pressure
   • capital allocation or balance-sheet errors
   • multiple compression
4. Separate cyclical downside from structural impairment.
5. Rank risks by probability, severity, and time-to-matter.
6. Explain the causal chain from business disappointment to stock downside.
7. End with confirming signals and explicit invalidation criteria for the bear case.

Output Requirements

• Begin by representing the consensus view accurately.
• Show the weakest assumptions in that view before proposing downside scenarios.
• Use Fact, Assumption, and Inference labels.
• Rank failure modes rather than listing every possible bad outcome.
• Distinguish downside from permanent impairment.
• Include what evidence would force the analyst to back away from the bear case.

Output Template

Quality Checks

• Verify that the consensus view is represented fairly enough that a bull would recognize it.
• Check that each failure mode has a plausible causal chain, not just a scary label.
• Confirm cyclical risk and structural impairment are not conflated.
• Ensure probability and severity judgments are relative and explained, not arbitrary.
• Remove unsupported accusations or extreme claims.

Guardrails

• Challenge assumptions, not straw men.
• Separate facts, assumptions, and inferences explicitly.
• Separate cyclical downside from structural impairment.
• Do not invent fraud, insolvency, or catastrophic scenarios without evidence.
• Avoid extreme claims unless the path, timing, and evidence are clear.

Example Prompts

• Build a bear case for this company and rank the main failure modes.
• Stress test the consensus thesis with a probability-severity downside matrix.
• Write a downside memo that shows the weakest assumptions in the bull case and the signals that would confirm or kill the bear thesis.