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The questions in Ken Fisher's new book, The Only Three Questions That Count (John Wiley & Sons, $28), seem cryptic. They boil down to: What do you think you know that you don't know? What can you know that others can't know? And, in a bow to the relatively new field of behavioral finance, what is your brain doing to trip you up?
Fisher, a money manager and Forbes columnist, says that answering those questions can free you from the tyranny of market myths. Among them: that a market that sells at a high price-earnings ratio is riskier than a low P/E market, that budget deficits are bad and that a weak dollar hurts stocks. He shows why some of these supposed axioms are false.
The trick to making money, he says, is to identify patterns that few others see. For example, an inverted yield curve in the U.S. (when short-term interest rates are higher than long-term rates) isn't considered bearish for stocks if yield curves elsewhere in the world have a normal, upward slope.
The bulk of the book examines various patterns and trends, describing which to note and which to ignore. Although Fisher often rambles, he makes a number of useful points. So if you're a serious stock picker, this book is worthwhile -- even if you have to wade through a six-point treatise on Gertrude Stein.
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