Coattail Investing

Coattail Investing

An investment strategy where investors mimic the trades of well-known and historically successful investors.

Notes:

This copycat investing can be very good - why not follow the best? This investing strategy works the best when the money manager or institution being mimicked buys companies with a buy and hold mentality. If the manager is buying the company for a short period of time, the delay between the purchase and the release of the information to the public may render the particular purchase a bad one. However many money managers buy companies with a buy and hold mindset, including the most successful one of all, Warren Buffett.

See also: Buy and Hold, Investing, Tailgating, Warren Buffet

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Coattail investing

A risky trading practice of making trades similar to those of other successful investors, usually institutional investors.