when making investment decisions investors can use a bottom up investment analysis approach or a top down approach 
bottom up investment analysis entails analyzing individual stocks for their merits such as their valuation management competence pricing power and other unique characteristics bottom up investment analysis does not focus on economic cycles or market cycles instead it aims to find the best companies and stocks regardless of the overarching trends in essence bottom up investing takes a microeconomic approach to investing rather than a macroeconomic or global approach the global approach is a hallmark of top down investment analysis it starts with an analysis of the economic market and industry trends before zeroing in on the investments that will benefit from those trends proponents of bottom up analysis include warren buffett and his mentor benjamin graham in a top down approach an investor might evaluate various sectors and conclude that financials will likely perform better than industrials as a result the investor decides the investment portfolio will be overweight financials and underweight industrials then it s time to find the best stocks in the financial sector in contrast the bottom up investor may have found that an industrial company made a compelling investment and allocated a significant amount of capital to it even though the outlook for the broader industry was relatively negative the investor has concluded that the stock will outperform its industry other investment analysis methods include fundamental analysis and technical analysis the fundamental analyst stresses the financial health of companies as well as the broader economic outlook practitioners of fundamental analysis seek stocks they believe the market has mispriced that is they are trading at a price lower than is warranted by their intrinsic value often using bottom up analysis these investors will evaluate a company s financial soundness future business prospects and dividend potential to determine whether it will make a satisfactory investment proponents of this style include warren buffett and his mentor benjamin graham 1the technical analyst evaluates patterns of stock prices and statistical parameters using computer calculated charts and graphs unlike fundamental analysts who attempt to evaluate a security s intrinsic value technical analysts focus on patterns of price movements trading signals and various other analytical charting tools to evaluate a security s strength or weakness day traders make frequent use of technical analysis in devising their strategies and timing their buying and selling activity example of investment analysisresearch analysts frequently release investment analysis reports on individual securities asset classes and market sectors with a recommendation to buy sell or hold them each firm offers different types of analyses pointing to where they see trends based on their research for example blackrock in its weekly commentary for nov 20 2023 states that it is neutral in long term treasuries because it believes risks are more balanced after the last three years of rising rates it believes the u s is on a weak growth path due to policy rates staying high and therefore does not see stocks going through significant growth higher rates are causing businesses to stagnate according to blackrock 2that being said blackrock is overweight in stocks as it believes the overall returns of stocks will be higher than that of fixed income securities in the next decade 2