Analyse stock-level (bottom-up) active strategies, covering why they work and how they are run
The idea
Bottom-up managers start with individual companies, believing that careful analysis of business model, competitive position, management and valuation exposes mispriced stocks. Value-oriented styles buy stocks trading below estimated intrinsic value and include relative value, contrarian, high-quality value, income and deep-value investing; growth-oriented styles seek companies with sustainable above-average earnings growth, often insisting on growth at a reasonable price. The process runs through screening, industry and company analysis, financial forecasts and valuation using discounted cash flow or multiples. Sector and macro exposures are a by-product of stock choices rather than deliberate bets. The classic pitfall for value is the value trap, a stock that is cheap because its fundamentals are deteriorating; for growth it is overpaying for growth that later fades.
In the app: 1 practice questions on this outcome, a narrated walkthrough with diagrams, spaced review that brings it back before you forget it.
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