Investopedia explains 'Prudent Investor Rule'
A prudent investment will not always turn out to be a good investment, because no one can predict with certainty what will happen with any investment decision. Thus, the rule only applies to the decision-making process; that is, based on the knowledge the fiduciary has at the time, is the investment a good idea? Investing exclusively in penny stocks, for example, would violate the prudent investor rule, because they are known to be risky at the outset.
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