investment

can you tell me the differences between the top down and bottom up approaches. what is the major assumption that causes the differences in these two approaches?

In the top-down approach, an investor focuses on an industry that s/he feels will do well -- and then chooses one or more companies within that industry. The assumption is that many companies in a booming industry, such as tech stocks in the late 1990s, will increase their values. In the bottom-up approach, an investor studies one stock at a time, regardless of the industry its in. This approach assumes that a good company will make money even when its industry as a whole isn't very profitable.

Check these sites for a lot more information.

http://www.fool.co.uk/news/investing/investing-strategy/2007/01/19/top-down-or-bottom-up.aspx

http://stocks.about.com/od/researchtools/a/030506screen.htm

(Broken Link Removed)

http://www.tiaa-cref.org/about/press/publications/market_monitor/2006_11_20.pdf

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