The objective of this series is to explore what focus investing is and how to practice the approach. I will start by explaining, in broad terms, what makes up the focused investing approach to investing. After this objective has been accomplished we will explore the various focus investing principles (see end of article for a list of focus investing principles) in more detail.

What is focused investing? To put it simply, focused investing is when an investor concentrates his investment picks in companies she thinks have a high probability of out-performing stock market (in our case we will consider the S&P 500 as representative of the overall stock market) returns over an extended time period.

Pursuing this strategy requires that you have patience and intellectual fortitude because you often will be following a strategy that is the opposite of the way a great majority of investors think (and preach) today. Diversification is an example of this; it is widely accepted as the absolute truth, in that investors must be diversified to protect them from company specific risk. This reasoning is correct to a point; while some diversification is great, over diversification should be avoided at all costs since by over diversifying an investor will tend to track the market return. Focus Investors will not find this acceptable, we want to attain an above average return in relation to overall stock market returns.

The statement, "concentrate your investment picks" means Focus Investors will limit their overall investment portfolio to 10-12 stocks. This number of investments in quality companies should provide a sufficient degree of diversification and, I believe, provide an excellent chance of outperforming the stock market over a long time period.

The investor's time frame is essential in deciding whether or not to pursue the focused strategy; returns will almost certainly be more volatile then the average portfolio, so at least a five-year time horizon would be prudent.

Another vital part of practicing this strategy is the investor's psychological makeup; patience and fortitude must be part of your psychological makeup, as this strategy will likely produce volatile results.

It is my hope that this discussion will be an open one, feel free to make comments and share them with us on the message boards at FocusInvestor.com. More articles in this series will be released as time permits so check back often!