It is intuitively logical that aggregate market analysis precede industry and company analysis because the government and federal agencies can exert influence on the aggregate economy via fiscal (change in government spending, taxes, etc.) and monetary (changing money supply, interest rates, etc.) policy. Further, inflation, another aggregate economic variable, must be considered because of its major impact on interest rates and the spending and saving/investment of consumers and corporations. Therefore, a major division is the asset allocation among countries based upon the differential economic outlook including exchange rates (the outlook for the currency).
Again, industry analysis should precede individual security analysis since there are several factors that are generally national in scope but have a pervasive effect on some industries – e.g. industry-wide strikes, import/ export quotas, etc. In addition, alternative industries feel the impact of economic change at different points in the business cycle – e.g., industries may lead or lag an expansion. Further, some industries are cyclical (e.g., steel, auto), some are stable (utilities, food chains, etc.).
The thrust of the argument is that very few, if any, industries perform well in a recession, and a “good” company in a “poor” industry may be difficult to find.