1. Asset allocation. This is often called a "top-down" approach. It is based on the assertion that something like 90% of investment return is derived from the decision to allocate assets.
2. Stock picking. This is often called a "bottom up" approach. The idea is that to seek out the best stocks wherever they are.
3. Active management. This approach takes elements of both the previous approaches. It uses a basic asset allocation method, but tries to tweak the allocation towards individual stocks that are thought to be the best.