Bottom up approach better for flat markets

growth investing

With returns likely to remain squeezed this year as the economy returns to normal long-term trends, finding the right stocks to back will depend on painstaking research and skillful stockpicking

Let's begin with the basic premise that the reason people choose to invest in the stock market is, over a reasonable period of time, to achieve a return superior to that of other asset classes, in many cases the bank or building society. For this to be the case, the underlying businesses have to be able to generate a return in excess of the opportunity cost of leaving their funds in the bank. After all, if they cannot, they would simply sell up and put the funds into a deposit account. With this in mind, people must therefore be seeking a higher return from investing in the market as they ...