Final answer:
High capital gains aren't guaranteed by purchasing stocks of highly profitable companies due to future performance uncertainty, efficient market pricing, and the influence of investor psychology and macroeconomic factors.
Step-by-step explanation:
A financial investor in stocks cannot simply earn high capital gains by buying companies with a demonstrated record of high profits for several reasons. Firstly, high past profits do not guarantee future performance due to a variety of market factors, such as changes in competition, market saturation, regulations, or shifts in consumer preferences. Secondly, stock prices usually reflect available information, including a company's profit history, and therefore, highly profitable companies are often priced efficiently meaning investors will pay a premium to own them, which may limit the upside potential for capital gains.
Moreover, the market is forward-looking, and stock prices are based on future profit expectations. If these expectations do not materialize, stock prices can decline, leading to capital losses instead of gains. Lastly, investor psychology and macroeconomic factors like interest rates and economic trends also heavily influence stock prices and can affect returns irrespective of a company's profit history.