A Claude prompt that pulls the recent earnings, reads the news, and tells you whether a stock is down for real reasons or just perception. The distinction Warren Buffett built his career on.
There are two reasons a stock can be down. The market is wrong about it (perception), or something is actually broken inside the company (reality). These look identical from the outside on day one. They are completely different setups underneath.
Warren Buffett built his career on this exact distinction. Michael Burry made hundreds of millions short-selling the housing market in 2008 by running the same move in reverse. This guide gives you the Claude prompt that pulls real data and tells you which one you're looking at, plus how to actually act on the answer.
Quick note: nothing in this guide is financial advice. Use this for research, not for investment decisions. Always do your own due diligence and talk to a licensed financial advisor for actual decisions.
Most retail investors look at a stock down 40 percent and read it as a warning. The pros read the same chart as a question. Is this stock actually broken, or did the market just panic?
Perception drops happen when the market overreacts to one bad quarter, panics about a temporary issue, prices in a worst-case that hasn't actually happened, or just gets the story wrong. The fundamentals are still strong. The stock is mispriced. Time corrects it.
Reality drops happen when the business is genuinely broken. Customers are leaving. Margins are collapsing. Management is making bad calls. The moat is gone. These stocks usually keep going down.
The whole job is telling them apart. The prompt below is a starting point that pulls real data and forces Claude to argue both sides honestly, not just confirm whatever you already believe.
Paste this into a new Claude chat with web access enabled. Replace the ticker. Claude will pull the most recent earnings, the recent news cycle, and the relevant filings, then write you a structured perception-vs-reality breakdown.
Copy this prompt
You are my equity research analyst working at god-tier level. I'm trying to understand whether a stock that has dropped is down for PERCEPTION reasons (the market is wrong, fundamentals are intact) or REALITY reasons (something is actually broken in the business). I want the deepest possible analysis you can produce. Use the web. Use every tool available to you. Be ruthlessly honest. I don't want what I want to hear. I want what is true. The stock I'm researching: [TICKER] Pull from the web, in this order: PART 1: FUNDAMENTALS - The 2 most recent quarterly earnings reports (revenue, gross margin, operating margin, net income, free cash flow, guidance) compared to the trailing 4 quarters - The 2 most recent earnings call transcripts (verbatim quotes from management on growth, margins, headwinds, tailwinds) - The most recent 10-K and 10-Q filings: the risk factors section, the MD&A section, and any restatements - Any 8-K filings in the last 6 months (material events, exec changes, lawsuits) - 4-year revenue and EPS history with growth rates PART 2: VALUATION - Current P/E, forward P/E, P/S, EV/EBITDA, and PEG ratio - The same ratios for the 3 closest public peers in the same sector - The stock's own 5-year historical multiples: is it cheap or expensive vs its own history? - Analyst price targets: high, low, median, and the dispersion between them - Recent estimate revisions trend (analysts moving up or down in the last 90 days?) PART 3: INSIDER AND INSTITUTIONAL BEHAVIOR - Insider buying and selling in the last 12 months, by name and amount - Recent 13F filings from the top institutional holders: are they adding or trimming? - Notable hedge funds with new positions (Berkshire, Bridgewater, Citadel, Renaissance, Pershing Square, Scion if applicable) - Short interest as a percentage of float, days to cover, and how it's trending PART 4: MARKET STRUCTURE AND TECHNICALS - Current price vs the 52-week high and low - Drawdown duration (how long has it been below the recent high?) - Relative strength vs the S&P 500 over 6 months and 1 year - Unusual options activity in the last 30 days (call/put skew, large block trades) - Volume profile: is the selling distributed or concentrated on a few days? PART 5: SENTIMENT AND NARRATIVE - The dominant bull case from Wall Street research notes - The dominant bear case from short sellers and skeptical analysts - Reddit, X, and StockTwits sentiment: what is the retail crowd actually saying? - Recent CEO and CFO media appearances, conference talks, podcast interviews: what tone are they striking? - Any class action lawsuits, SEC investigations, or regulatory actions pending PART 6: BUSINESS HEALTH SIGNALS - Customer concentration risk (top 10 customers as % of revenue if disclosed) - Supplier concentration risk - Glassdoor employee sentiment and trend (CEO approval, employee morale) - Product reviews, G2 ratings, or NPS where available - Recent executive departures or arrivals - The company's hiring trend (LinkedIn job posts up or down in the last 6 months?) Now synthesize everything you pulled into this exact structure: 1. THE SETUP. In 4 sentences: what the company does, the magnitude and duration of the drawdown, the market's stated reason for it, and the one number from your research that most stands out. 2. THE CASE FOR PERCEPTION (market is wrong). The 5 strongest arguments that this drop is overdone. Cite specific numbers and quotes from your sources. Anchor every argument to evidence. 3. THE CASE FOR REALITY (business is breaking). The 5 strongest arguments that this drop is justified. Same standard: specific numbers and quotes from your sources. 4. THE INSIDER TELL. What insiders, hedge funds, and short sellers are DOING right now (not just saying). Money behaviors are more reliable than words. Name names and amounts. 5. THE VALUATION FLOOR. Based on peer multiples and the company's own historical multiples, what would be a defensible "fair value" range right now? Show the math. 6. THE LEAN. After arguing both sides honestly, which case is stronger and why. Be specific. No wishy-washy "it depends." Take a side based on the weight of evidence. 7. THE 5 DATA POINTS TO WATCH. The most important things to monitor over the next 6 months that would flip the answer. Be specific and measurable, not vague. 8. THE 3 QUESTIONS I AM NOT ASKING. The hardest questions about this stock that I am probably avoiding without realizing it. Force me to confront them. 9. THE PORTFOLIO QUESTION. If you had to advise a friend on this, would you tell them to: (a) avoid completely, (b) watch but don't buy yet, (c) start a small position, (d) build a meaningful position, or (e) something else? Explain your reasoning. 10. WHAT YOU COULDN'T VERIFY. Anything in your analysis where the source was thin, the data was stale, or you had to make assumptions. Surface every weak link in your reasoning so I know exactly what to double-check. This is research, not financial advice. I will make my own decision. Your job is to make me see every angle that matters and the evidence underneath them, so I'm making the call with the deepest possible picture instead of a hot take.
The Buffett move
Warren Buffett's most famous quote on this is "be fearful when others are greedy, and greedy when others are fearful." The work behind that quote isn't a vibe. It's a brutal honest assessment of whether the fear is justified or not. The prompt above is a stripped-down version of exactly that work.
If the perception case is much stronger: the stock might be mispriced. This is where deeper research starts, not where it ends. Look at the company's 10-K, talk to people who use the product, check the long-term return history. Don't buy just because Claude wrote a good paragraph.
If the reality case is much stronger: Claude is telling you to walk away. The market is right. The business is breaking. Even a low price can keep going lower. There's a phrase for this in value investing: 'falling knife.' Don't try to catch it.
If it's split: this is the most common output and the most useful one. You learn that there are real risks AND real misreadings. Now you know exactly which data points to watch. That's the actual answer most of the time.
Always cross-check. Claude is pulling from the web and can miss context, paywalled research, or recent breaking news. Treat the output as a structured starting point, not a verdict. The point is better research, not a buy/sell signal.
Not financial advice, actually
Nothing in this guide is financial advice. This is a research prompt, not a recommendation. Do your own due diligence, look at the actual filings, talk to a licensed financial advisor before making investment decisions. The prompt makes you smarter about the question. You still have to make the decision.
The Only AI Masterclass You Need
If this guide helped, but you’re looking to go deeper, I got you!! My 30-Day Challenge takes you from saving AI tips you never use to actually building with AI, step-by-step.
I show you exactly how I automated two e-commerce brands, my social media, and most of my personal life, then hand you the agents, workflows & systems to do the same. I’m teaching you every single thing I know with one lesson and one build a day.
Join the AI Masterclass →© 2026 Mariah Brunner. All rights reserved.