The Only Three Questions That Count: Investing by Knowing What Others Don't
By Ken Fisher
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The Only Three Questions That Count is the first book to show you how to think about investing for yourself and develop innovative ways to understand and profit from the markets. The only way to consistently beat the markets is by knowing something others don’t know. This book will show you how to do just that by using three simple questions. You’ll see why CNBC’s Mad Money host and money manager James J. Cramer says, "I believe that reading his book may be the single best thing you could do this year to make yourself a better investor.
In The Only Three Questions That Count, Ken Fisher challenges the conventional wisdoms of investing, overturns glib theories with hard facts, and blows up complacent beliefs about money and the markets. Ultimately, he says, the key to successful investing is daring to challenge yourself and whatever you believe to be true. Packed with more than 100 visuals, usable tools, and a glossary, The Only Three Questions That Count is an entertaining and educational experience in the markets unlike any other, giving you an opportunity to reap the huge rewards that only the markets can offer.
By T Faranda
Full disclosure: I am a financial advisor. And I've read Kenneth Fisher's column in Forbes since he started writing it 22 years ago.
This is a superb book. The sub-title is "Investing by Knowing What Others Don't" and it is the best book I've read on investing and asset managment in years.
The author is an investment manager based in California, who also writes a monthly column in Forbes magazine. He's a pretty successful guy, ranked 297 on the latest Forbes 400 Richest American's list. Yup. That's successful allright.
His father is Philip Fisher, also a pretty famous investment manager, who was known for recognizing good companies, and then buying and holding their stock - sometimes for decades. Lastly, Fisher has an interesting philanthropy - redwood trees. He has endowed the only university chair dedicated to a single species of tree.
On to the book. Here's the only negative: Fisher has a slightly cute sense of humor, which I found a little annoying at times.
But the pluses are huge.
(1) What do you believe that is actually false? (2) How can I fathom what others find unfathomable? And, (3) What the heck is my brain doing to blindside me now?
Each of the first three chapters is dedicated to explaining one of the three questions. The first chapter debunks many "facts" about markets that are actually wholly or partially incorrect myths. Here are two examples: High P/E markets are riskier than low P/E markets (P/E stands for price-earnings ratio and is one of the most fundamental valuation metrics for stocks) and a weak U.S. dollar is bad for stocks.
Fisher makes the point that the only way to beat the financial market is to know something the market doesn't know, or at least ignores. This is pretty basic. The market (prices of stocks, commodities, currencies, bonds, etc) has already discounted in the underlying pricing known knowledge; to outperform the averages, you have to know something not widely known.
is how our mental processes frequently work against us in trying to sort through meaningful data and relationships. Fisher refers to the market as "The Great Humiliator" (TGH) where we are constantly at risk of allowing our emotions, like pride and regret, get in the way of rational decisions. For example "confirmation bias" where we seek evidence confirming our preset notions and reject contradictory evidence. And of course very applicable to other aspects of our life, besides our finances.
The remainder of the book - six chapters plus a short and interesting conclusion - expands on the three questions. The chapters have titles like "Capital Markets Technology", "Shocking but True", and the last chapter "Putting it all Together."
Much of the analysis is quite brilliant. For example I loved his examination of U.S. budget deficits, and why they are not negative for the financial markets - or for the country. COULD they be a negative - YES - but only if we do certain stupid things in managing our fiscal and monetary policies. He step by step builds a powerful case that, if anything, the United States is underleveraged - we could easily manage more debt. He gives several examples of debt-free developed countries with stagnant economies and lower standards of living.
I could go on and on. Get the book if you want a mind expanding read about managing your money (And your life! Much of what he says has applicability to all facets of life). Their are 42 pages of appendixes, including showing his audited records as a prognosticator in his Forbes column and the performance of his money management firm.
His record shows that Fisher doesn't just talk the talk; he has walked the walk.