Final answer:
Historical profits do not guarantee future capital gains as stock prices include market expectations and are influenced by many unpredictable factors. Investors can manage risk and build wealth over time with education, early savings, and diversified investments.
Step-by-step explanation:
A financial investor cannot guarantee high capital gains simply by investing in companies with a history of high profits because past performance does not necessarily predict future results. The stock market's pricing mechanism includes investors' expectations about future profits, not just historical ones. Hence, if a company has been performing well, it is likely that this information is already factored into the stock price, leaving less room for unexpected growth that would drive prices higher and result in capital gains for investors.
Moreover, investing is highly influenced by external factors, such as changes in market conditions, economic cycles, and competition, which can affect a company's future profitability no matter how well it has done in the past. It is difficult even for seasoned financial professionals to forecast economic trends accurately. Therefore, investors are encouraged to gain additional education, save money early, and diversify investments to manage risks and build wealth over time.