Top Down Vs Bottom-Up: The Investing Strategy Right For You

Two investing strategies that can earn you big returns and a great portfolio

When investing it is very helpful to have a playbook that you follow and you use to help make investing decisions.? One way to look at investing is a Top Down approach where you consider what is happening in the overall economy and seeing how an industry might play out in this environment.? A bottom up approach is when you consider one stock and it?s overall strength regardless of the economy.

Learn if you are a top down or bottom-up kind of investor.

Both portfolio management philosophies can result in widespread diversification or?a focused group of core holdings. ?Both portfolio management philosophies can result in building up positions in a single area of the economy to the exclusion of others based upon circumstances and luck. ?There are a lot of people who have made a lot of money practicing one or the other investing strategy. ?You have to find the one that feels right for you and your circumstances, temperament, and resources.

A bottom-up approach can be as simple as looking at industry and deciding who the strongest player is for a buying opportunity or evaluating the weakest player in the industry that might become the strongest. ?A top down approach you can easily pick an ETF or a mutual fund for an industry that you think will take off ?in the future economy. ?For example if you think gold will take off then buy the gold ETF: GLD or if you think the shale boom will be the next big thing for the US then buy the US Oil ETF: USO. Always do you research before investing.

See which strategy you can use to increase your wealth.