What is a top-down investment approach?
An investment approach that involves looking at the global economy and financial markets and then separating those components into finer details. An investor may use different criteria when deciding to employ the top-down approach. For example, an investor may consider such factors as geography, sector trends and size. After looking at global economic conditions, different sectors are analyzed in order to select those that are forecasted to outperform. From this point, stocks of specific companies are further analyzed to find those that offer the best risk/reward opportunities.
Related Questions
- How can the Communities of Learning approach get started? How can it avoid lapsing into being just another top-down dictate?
- Why aren’t all investment advisors using this academic, scientific, Nobel Prize winning approach?
- What is the difference between passive and active management investment approach?
