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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