Top-down versus bottom-up approach


  • Business
  • Wednesday, 15 Aug 2007

Most fund management companies use the top-down approach while investment gurus like Benjamin Graham and Warren Buffett favour the bottom-up approach. Investors can combine the two approaches by applying top-down analysis on asset allocation decisions while using a bottom-up approach to select the individual securities in the portfolio. 

Q: Should I buy stocks now given their cheap valuation or wait for clearer market outlook? 

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