EIC Analysis or Top-Down Approach

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Basics of Top-Down Approach (EIC Analysis)

Basics of EIC Analysis which will be helpful for a common man to understand. How to design a portfolio. An optimum portfolio is that which grows faster than the economy when the economy expands and falls less as compared to the economy when the economy contracts.

1) Economics Analysis: Basically economic work in the cycle. Which has two phase expansion and contraction we can simply identify the phase by observing our surroundings. Let's say, if we hear GDP is growing, more employment opportunities are being created, Infrastructure improving, MNCs are investing etc.  these are the examples of expansion economy and contraction is vice versa.

2) Industry Analysis: After analysing the economy we need to pick those industries which perform as per the economy cycle. Industries are classified as per their nature how they  perform as per the phase of economic cycle.

3) Company analysis: It is much easier to identify a company which will be good for investment. We just have to be aware about our surroundings whatever product you use just look at its back which brand it is.  By continually seeing the one brand again and again you will be sure that the company has a good product portfolio which is very helpful for top line i.e sales.


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