In Finance, what is a Research Note?

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  • Written By: Geri Terzo
  • Edited By: A. Joseph
  • Last Modified Date: 22 September 2018
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Stock market investors have access to multiple tools to guide them through the buy, sell and hold process. One of those instruments is a research note, which is a memo issued by a a full-service broker firm or another investment advisory service to alert investors when it might be time to make a change in their investment portfolio. Typically, these brief alerts are issued in response to a specific event that has the capacity to move an individual company's stock dramatically either upward or downward during that trading day or in the near future. A research note also might be issued in response to a broader opportunity or geographical trend that has the potential to impact an individual security, such as a stock or group of stocks.

Most investors buy and sell stocks through a brokerage firm, many of which have a research arm devoted to uncovering trends and events that are likely to affect a company's stock performance. A full-service broker is more likely to issue a research note than a discount broker. This is because as the name suggests, a discount brokerage is less expensive but does not have the research muscle that a full-service firm often can provide. A sell-side analyst is the professional who works for a brokerage firm and issues research notes on stocks on bonds, and a buy-side analyst works for an investment firm outside of the brokerage universe, such as a mutual fund firm, and it provides research.


Trends in research could be tied to an entire industry or region, or they might be company-specific to an individual stock. When something noteworthy occurs that could influence trading in a security, a broker will issue a research note to clients as a means of encouraging potential changes to an investment portfolio. Some of the common themes to a research note include advice to buy, sell or hold the security. When a broker issues a research note, it often is an attempt to underscore a more thorough research report that outlines particular themes tied to an investment.

If the underlying theme is to buy, this means an opportunity has risen in the financial markets to purchase a particular stock or bond at a bargain price. Ideally, an investor will be able to sell this security at a later date for a profit. If the theme behind a research note is to sell, however, a negative event might have unfolded at the company that may result in a spiraling stock price and therefore broker may suggest that investors stem their losses by selling that security right away. Another potential recommendation is to simply hold onto an investment and not make any drastic moves at the time the research note is issued. There might be events that are poised to occur and could materially affect a security's value one way or the other but that will take time to ascertain.



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