DEFINITION of 'Muppet Bait'

Naive investors who are lured into buying hot stocks or securities that the smart money and/or insiders are selling. "Muppet bait" was popularized by Henry Blodget, a former Wall Street analyst and co-founder of news site Business Insider. Individuals and groups who fall under this category often follow news and hype behind initial public offerings, rather than perform their own research.

BREAKING DOWN 'Muppet Bait'

In a May 2012 interview with CNN, Blodget attributed the genesis of the term coined by him to Goldman Sachs' emails, in which they disparagingly referred to their customers as "Muppets." The Goldman emails were mentioned in the course of an op-ed article by a Goldman Sachs executive director in The New York Times on Mar. 14, 2012 titled "Why I Am Leaving Goldman Sachs." The article bemoans the culture at Goldman Sachs as having become one where the only priority is making the most possible money off clients, often by pitching lucrative and complicated products even if these products were not aligned with the clients' goals.

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