High Flier

A term that refers to stocks that have seen a huge appreciation in its price, and is traded at huge multiples to earnings. It is usually a growth stock and a market favorite. However, many of them may have weak fundamentals with their only support being hot air and euphoria in a bull market.

Many dotcoms were highfliers in the late 1990s but ended up getting decimated in the ensuing bear market. Therefore it is important for investors to avoid such stocks as long term investments. A trader/investor or portfolio manager may be able to generate huge returns by investing in high fliers but this may not be sustainable and may lead to disasterous consequences in the long run.

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