Definition of Bottom-up Investing

What is the definition of the term "bottom-up investing"? What does "bottom-up investing" mean?

"Bottom-up investing" is when an investor ignores the perceived strength of the overall economy and any other macroeconomic issues and instead focuses on individual companies. In addition, the strength of overall market sectors is not considered - instead, how an individual company is operating their own business is the foremost consideration.

Let's look at an example of "bottom-up investing" - Apple.

Apple has been a force over the past 5-6 years, releasing successful product after successful product. Weak consumer spending? Doesn't matter. Recession? Doesn't matter.

What does matter is that Apple has performed exceptionally well as a company. Apple has consistently outperformed and has continued to build their extremely loyal following.

Apple is a prime example of a company that has outperformed despite a weak global economy. Apple is a prime example of the benefits of "bottom-up investing". Despite the performance of sectors that Apple is involved in, such as personal computers or other electronics, Apple has excelled as a company.

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