DEFINITION of 'Cherry Picking'

1. The act of investors choosing investments that have performed well within another portfolio in anticipation that the trend will continue.

2. Relating to bankruptcy proceedings whereby the courts uphold contracts favorable to bankrupt companies, but annul those that are unfavorable.

BREAKING DOWN 'Cherry Picking'

1. Used by both fund managers and individual investors, cherry picking is a method that reduces the amount of time required for researching stocks as the pool of securities in which investors pick from is significantly narrowed. For example, rather than having to research all the stocks that deal with semi-conductors within the exchanges, an investor may instead look at a few mutual funds investing exclusively in these products and research only those investments picked out to be the best performers.

2. Legislation has been changing in order to stop this practice from continuing.

RELATED TERMS
  1. Technical Bankruptcy

    The state of a company or person who has defaulted on a financial ...
  2. Bankruptcy Court

    What is bankruptcy court?
  3. Volatility Quote Trading

    A method of quoting option contracts whereby bids and asks are ...
  4. Pooled Funds

    Funds from many individual investors that are aggregated for ...
  5. All Weather Fund

    A mutual fund that tends to perform reasonably well during both ...
  6. Quick-Rinse Bankruptcy

    A bankruptcy proceeding that is structured to move through legal ...
Related Articles
  1. Small Business

    Taking Advantage Of Corporate Decline

    A bankrupt company can provide great opportunities for savvy investors.
  2. Investing

    Don't Go Broke Buying Bankrupt Stocks

    Don't be tricked by bankrupt companies' low stock prices; they're low for a reason.
  3. Investing

    The Benefits of Picking Mutual Funds Over Individual Stocks

    Learn about the advantages of investing in mutual funds rather than individual stocks, including the benefits of affordability, oversight and diversification.
  4. Investing

    Is Stock Picking A Myth?

    Find out if mutual fund managers can successfully pick stocks or if you're better off with an index fund.
  5. Investing

    How To Pick A Stock

    So you've finally decided to start investing. But what should you put in your portfolio? Find out here.
  6. Financial Advisor

    An Overview Of Corporate Bankruptcy

    If a company files for bankruptcy, stockholders have the most to lose. Find out why.
  7. Investing

    When To Buy A Mutual Fund

    There is money to be made in mutual funds, but investors fall into several pitfalls that keep them from maximizing their profits. Read these tips to take the uncertainty out of investing in mutual ...
  8. Investing

    Pick The Winners At The Mutual Fund Track!

    For both mutual funds and racehorses, there's no surefire way to pick a winner.
  9. Investing

    Choose A Fund With A Winning Manager

    We break down the key components of analyzing a fund manager's performance so you can find a winner.
RELATED FAQS
  1. How do I get information about my bankruptcy case?

    Learn about different places to search when seeking information about an individual's bankruptcy. Learn about Public Access ... Read Answer >>
  2. What happens when a corporation declares bankruptcy?

    Understand what options are available to corporations under bankruptcy protection, and learn what takes place after bankruptcy ... Read Answer >>
Hot Definitions
  1. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  2. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  3. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  4. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  5. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  6. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
Trading Center