Final answer:
A financial investor cannot guarantee high capital gains just by buying stocks of companies with a history of high profits, as stock prices are influenced by many factors, market expectations, and the current price may already reflect the high profits.
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. First, past performance is not necessarily indicative of future results. The stock price at the time of purchase may already reflect the company's history of profitability, meaning that investors have already accounted for this information in their trading decisions, making the price reflect those profits.
Moreover, stock prices are influenced by a myriad of factors such as market conditions, investor sentiment, macroeconomic trends, and company-specific news. Even if a company continues to be profitable, external factors can cause stock prices to fluctuate, impacting potential capital gains. Lastly, high profitability does not guarantee stock price appreciation. The market's expectations and the company's ability to meet or exceed those expectations often have a more direct impact on stock prices.