Coattail Investing

DEFINITION of 'Coattail Investing'

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

BREAKING DOWN 'Coattail Investing'

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.

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RELATED FAQS
  1. What does "buy and hold" mean?

    Buy and hold refers to an investing strategy practiced favorably by passive investors (or couch-potato investors). When buying ... Read Answer >>
  2. Is our investment manager making too many mutual fund trades?

    I am an administrator for a 501(c)(3). One of our investment managers had a total of 189 mutual fund trades in a year. This ... Read Answer >>
  3. What's the difference between institutional and non-institutional investors?

    There are a number of differences between institutional investors and non-institutional investors. If you are considering ... Read Answer >>
  4. Where does a hedge fund get its money?

    Learn how a hedge fund is structured and how the managing partner of the fund goes about the process of finding and soliciting ... Read Answer >>
  5. What investments have been the poorest historical performers?

    Learn about low performance investments and how they are used by investors. Find out which investments lose funds and how ... Read Answer >>
  6. Tiffany's brother, Jamal, is a new investor but believes that the markets are basically ...

    The correct answer is C). A buy-and-hold strategy describes a passive investment approach. This approach assumes that markets ... Read Answer >>
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