A focus list is a document that is published by the research department in a given investment firm. The idea behind this type of document is to identify specific stocks or investments that are considered especially attractive by the firm. When the research methods used to qualify the stocks included on the focus list are efficient and accurate, the document is not only helpful to investors but also helps to enhance the reputation of the firm for knowing how to pick the best stock offerings.
As with most investment approaches, the preparation of a focus list requires taking into consideration a wide range of factors that are likely to influence the future movement of a given stock. This includes looking closely at the past performance of the shares, the current market position, and the stability of the corporation that issues the stock. At the same time, attention to current and impending market conditions must also be taken into account, including the stability of the industry in which the issuer labors. Often, the research associated with the focus list will also allow for potential factors such as the results of upcoming elections, political unrest, or even the potential for natural disasters to undermine the performance of a given stock.
Investors benefit from consulting the focus list issued by a given firm when making decisions to buy or sell shares of the companies included on the current version of that list. This is because the research team at the investment firm often has access to new developments as they are announced on the trading floor or otherwise released to the public. The investor may or may not receive that same information until later in the trading day, unless he or she follows the markets very closely. From this perspective, the focus list can alert an investor to developing situations in which it may be wise to sell in order to avoid a loss, or buy now before the value of the shares begin to increase.
Another side benefit to posting an accurate focus list is the level of prestige that the investment firm achieves among investors and other investment firms. A firm that consistently provides accurate predictions of which investments are likely to increase in value and outperform other options in the short term gains a great deal of respect among its peers. This can aid the firm in attracting new clients who have developed confidence in the accuracy of the firm’s analysts, and believe that his or her investment portfolio would be more secure in the hands of that firm.
