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Definition of 'Cherry Picking'

1. The act of investors choosing investments that have performed well within another portfolio in anticipation that the trend will continue. 2. Relating to bankruptcy proceedings whereby the courts uphold contracts favorable to bankrupt companies, but annul those that are unfavorable.

Investopedia explains 'Cherry Picking'

1. Used by both fund managers and individual investors, cherry picking is a method that reduces the amount of time required for researching stocks as the pool of securities in which investors pick from is significantly narrowed. For example, rather than having to research all the stocks that deal with semi-conductors within the exchanges, an investor may instead look at a few mutual funds investing exclusively in these products and research only those investments picked out to be the best performers. 2. Legislation has been changing in order to stop this practice from continuing.

Cherry Picking
1. In bankruptcy, a decision by a court to uphold contracts with favorable terms toward the company declaring bankruptcy and to nullify contracts with unfavorable terms. Laws restrict the use of cherry picking. 2. An investment strategy in which one picks securities that have been performing well with the expectation that they will continue to perform well. This carries the risk of loss due to an unexpectedly changing trend.