What are top-down and bottom-up investing strategies?
In their quest to find winning stocks, individuals and wealth managers deploy various investing strategies like value, growth and momentum. Another popular ploy used for stock-picking comprises two contrasting techniques. These are known as top-down and bottom-up investing. Here’s how these work and differ from one another.
Top-down investing
As the name suggests, this bird’s eye-view approach starts with the general and moves to the specific. It involves analysing the macroeconomic data first and eventually zeroing in on the micro data, that is, a stock or company.
The following steps explain how this strategy works.
Analysing economy: The investor considers the prevailing and future economic situation, domestic or global trends by…
