| Stock market investing is a science that takes | | | | do well in the given economy and then the |
| time to be perfected and that it is precisely for | | | | analyst will look at the company's which will do |
| this reason that there are a variety of strategies | | | | well in the given sectors. It is these companies |
| that have been developed by various analysts | | | | that the analysts will recommend you to buy. |
| which help them pick up stocks and make lots of | | | | The bottom up approach is exactly the opposite |
| money using these stocks. That said there have | | | | of the top down approach and the analysts using |
| been various long term stock picking strategies | | | | this approach generally pick a company and then |
| that have been employed by the stock market | | | | see how that company is performing. They are |
| traders. | | | | generally not concerned about the state of the |
| These stock market traders who invest in the | | | | economy. This style is more suited for more |
| long term look out for two main things. These | | | | aggressive investors as opposed to the more |
| two main things which drive the investing | | | | conservative investors who will generally go for |
| philosophy are fundamental research and the | | | | the top down approach. |
| economic outlook. The fundamental research is a | | | | That said there is generally nothing wrong with |
| generally viewed as one which will give you the | | | | both the approaches and the only difference lies in |
| ability to spot some undervalued stocks in which | | | | the way the people approach investing. It also |
| you can invest and in a period spanning the next | | | | depends on the risk appetite of the investor. For |
| 10 years these stocks should be able to give you | | | | the beginners investing in the market you should |
| a good amount of returns. That said the | | | | always look at the middle path and gradually |
| fundamental research has two principles namely | | | | gravitate towards one or the other approach. For |
| the bottom up approach and the top down | | | | seasoned investors it is always better to stick to |
| approach. | | | | one approach. |
| The top down approach as the name suggests | | | | Again a lot of research is also sometimes harmful |
| looks at the top level first. This essentially means | | | | so it is better at times to use your own gut feel |
| that the analysts will look at the economy first | | | | for picking out a few stocks. Sometimes it can be |
| and see if the economy is doing good or not. | | | | better than research and can pay big dividends. |
| Then the analyst will look at industries which will | | | | |