Top-down investing is an investment analysis approach that involves looking first at the macro picture of the economy, and then looking at the smaller factors in finer detail. After looking at the big-picture conditions around the world, analysts next examine the general market conditions followed by particular industrial sectors to select those that are forecast to outperform the market. From this point, they further analyze the stocks of specific companies to choose potentially successful ones as investments by looking last at a particular company’s fundamentals. Top-down approaches prioritize macroeconomic or market-level factors most.
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