Bottom-up investing
Bottom-up investing is the opposite of top-down investing. Investors who follow a bottom-up approach are not interested in overall economic trends and believe that cycles are hard to identify easily. Instead, they look at individual companies rather than industries. Their analysis is based on a company’s fundamentals (see our explanation in the fundamental investing section).
The bottom-up approach focuses on a company’s individual characteristics, such as its financial stability, competitive position and management. The aim is to buy shares in companies which have good prospects, whatever the economic conditions.
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Further Reading
- Still confused? This article explains bottom-up investing in more detail and contrasts it with top-down investing.
