In contrast to top-down investing, bottom-up investing involves analyzing specific characteristics of a stock. Bottom-up investors look at the fundamental information of each stock on a case-by-case basis.
Bottom-up investors aim to identify profitable opportunities through a company’s attributes and its valuation in the market. For instance, a company with a competitive advantage would be attractive.
This approach starts by looking at the individual company but doesn’t stop there. Following company-level research, bottom-up investors then analyze the sector and the macroeconomic environment.
Bottom-up investors are usually buy-and-hold investors that have a deep understanding of the fundamental characteristics of a company. They use fundamental analysis to inform investment decisions.
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