December 19th, 2011
Investing: Top-down Or Bottom-up
When it comes to investing in good companies, there has been much debate on the top-down and bottom-up approaches. Most fund management companies use the top-down approach and recommend that investors examine the economic and industry outlooks first before deciding on which stocks to purchase.
On the other hand, investment experts like Warren Buffet and Peter Lynch favor the bottom-up approach. They say that macroeconomic forecasts are actually major distractions for investors as the projections might turn out to be wrong. Instead, investors’ efforts should be placed more on detecting the quality of earnings and asset value of the company.
Investing
Both approaches have their strengths and weaknesses, but they share a common goal, which is identifying good fundamental companies to invest in.


