What is Coattail Investing?
Coattail investing is a process that occurs when an investor attempts to release a return by duplicating the strategies that have proven successful for another investor. In order to accomplish this process of imitating success, the investor will initiate the copycat trades as soon as the trading performance is made public. When the trading is accomplished in close proximity to the original activity, the expectation is that the coattail investor will be able to at least make a modest profit before the market changes and the trade loses upward momentum. True coattail investing involves overlooking a number of factors that are considered very important with other investment strategies. The coattail approach often means giving no particular attention to the overall considerations of the investment portfolio, or even taking a moment to evaluate the amount of risk associated with the stock. Essentially, if the investment was good enough the first time, it is expected to work just as well for
