Top-down investing is a strategy that begins with the big picture. Rather than analyzing individual companies first, top-down investors start by evaluating macroeconomic conditions, then narrow their focus to promising sectors, and finally select specific stocks within those sectors. The logic is straightforward: if the economic environment favors certain industries, companies within those industries are more likely to benefit.

This approach is the mirror image of bottom-up investing, where company-level fundamentals drive decisions regardless of macro conditions. Top-down investors believe that getting the macro call right matters more than individual stock selection, because even strong companies can struggle when the economic tide…