What it is
Copycat investing, also called coattail investing, involves copying the investing strategy or ideas of well-known successful investors or investment managers.
This is typically associated with a long-term approach. Individual and institutional investors try to mimic the investing moves and portfolio of famous investors in an effort to replicate their success.
What it means for you
Copycat investors may choose to “ride the coattails” of 1 or more well-known investors. To find out where famous investors are putting their money, people comb through publicly available information such as company disclosures and news reports.
If you’d like to copy someone else’s portfolio, understand that success isn’t guaranteed for a number of reasons. Firstly, the investor you’re trying to copy may have different objectives from your own.
For example, your “model” investor may prefer to stay invested in a certain asset or maintain the same portfolio for decades or longer, while you might need to pull your money out sooner or change your approach due to a shift in your personal situation.
You might also end up acting on outdated information due to a delay between a famous investor’s moves and the release of disclosures and reports.
Due to a difference in timings, you may not get the same results despite owning the same assets as another investor.
Remember to practice due diligence and consider your unique situation before deciding to copy someone else's investing decisions.
