If you need to anticipate key cyclical turning points, would you recommend a top down approach or bottom up approach?
bottum up - analyzes fundamentals of company’s and their inventory patterns in specific
top down can be delayed since it is generally based of econometric models and can lag the turniong point
CFAI book says bottom up approach should be followed!
But isn’t the bottom up approach slow in reacting because analysts are optimistic while the economy is going into recession?
no i think they analyze the company fundamentals and realize that the inventory/sales ratios are off, etc which will elad them to aggregate the company data and predict the eturns faster