Bottom-up investing

Bottom-up investing,

Definition of Bottom-up investing:

  1. Bottom-up investing forces investors to consider microeconomic factors first and foremost. These factors include a company's overall financial health, analysis of financial statements, the products and services offered, supply and demand, and other individual indicators of corporate performance over time. For example, a company's unique marketing strategy or organizational structure may be a leading indicator that causes a bottom-up investor to invest. Alternatively, accounting irregularities on a particular company's financial statements may indicate problems for a firm in an otherwise booming industry sector.

  2. Bottom-up investing is an investment approach that focuses on the analysis of individual stocks and de-emphasizes the significance of macroeconomic cycles and market cycles. In bottom-up investing, the investor focuses his attention on a specific company and its fundamentals, rather than on the industry in which that company operates or on the greater economy as a whole. This approach assumes individual companies can do well even in an industry that is not performing, at least on a relative basis.

  3. Identifying individual excellent firms as candidates for investment while (in contrast to top-down investing) disregarding the state of, or trends in, the industry or economy as a whole.

How to use Bottom-up investing in a sentence?

  1. In bottom-up investing, the investor focuses his attention on a specific company and its fundamentals, rather than top-down investing that looks at industry groups or on the greater economy first.
  2. The bottom-up approach assumes individual companies can do well even in an industry that is not performing, at least on a relative basis.
  3. Bottom-up investing is an investment approach that focuses on the analysis of individual stocks and de-emphasizes the significance of macroeconomic cycles and market cycles.

Meaning of Bottom-up investing & Bottom-up investing Definition