Bottom-up investing

Bottom-up investing is a strategy that overlooks the significance of industry or economic factors and instead focuses on the analyses of individual stocks and companies.

The approach assumes that individual companies can perform well in an industry that isn’t doing well. If the company is strong, then macroeconomic concerns are thought to be of relatively little importance.

The bottom-up strategy therefore relies on extensive research and analysis of stocks and companies. Some investors look for firms with low p/e ratios and high earnings growth, while others look for financial stability, or seek to become familiar with the company’s products and services.

• See Tim Bennett’s video tutorial: Six numbers that every investor should know.

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