Book Review: The Only Three Questions That Count

I resisted getting this book when it first came out.  Much as I enjoy Ken Fisher as a writer, and appreciate the interaction that I have had with him over the years, the title turned me away.  “Three questions? Only three?  Investing is far more complex than that.”  I would say that to myself.

After reviewing his most recent book, I said to myself, “Well, you’ve reviewed all of his books but one; you may as well do it.”  So, I borrowed the book from a friend.

I wish I had read it sooner.  The three questions are simple ones, and they have been mentioned elsewhere on the internet, so here they are:

  • What do you believe that is actually false?
  • What can you fathom that others find unfathomable?
  • What the heck is my brain doing to blindside me now?

The idea is to get us to think more deeply.  Test the received wisdom to see if it is really true.  Look for unusual areas of competitive advantage that you have that are possessed by few.  Your emotions will often lead you astray: look for opportunity amid fear; look for shelter amid wild abandon.

Competitive advantage in investing is an elusive thing.  The clever idea that you might discover is just one journal article away from an academic toiling in obscurity, but will go to a  hedge fund two years from now.

Patterns that work in one market should work in most markets.  If your discovery seems to work in most places, it might work well, until it is discovered and used heavily.

I found a number of insights useful.  Like me, he uses E/P relative to bond yields to try to estimate whether markets are rich or cheap.  I also found his insights about how the yield curve affects style investing to be useful.  I do something like that through my industry rotation.

Now, in the intermediate-run, most things that people are scared about don’t affect the market much.  Government deficits seem to be a positive for stocks in the short run.  Trade deficit?  Little effect on stocks.  Weak dollar?  Little effect.  This book debunks a number of common worries, though I would say that if the problem got significantly bigger, perhaps the result would be different.

Ken Fisher offers what I would deem to be good advice on Asset Allocation, and how to make sell decisions, amid many other issues.  I enjoyed the book a lot, and would recommend it to my readers.


Occasionally, the book seems disjointed.  Ken Fisher is covering a lot of ground, and he takes a decent number of “side trips” to explain concepts.  The flip side of that is that the book covers many areas of the equity markets, and helps to explain what drives them.

Now, sometimes I wonder if multivariate approaches might reveal different conclusions than what Ken Fisher comes to.

Who would benefit from the book: Investors with moderate experience in investing who are finding the going harder than they expected.  This book will help them take a step back, and think twice about investment decisions.

If you want to buy the book, you can buy it here: The Only Three Questions That Count: Investing by Knowing What Others Don’t (Fisher Investments Press)

Full Disclosure: Book reviews are my main profit center at my blog.  They allow me  to create a win-win situation for me and my readers.  I don’t want my readers to waste their money to reward me.  I would rather they buy things that they want to buy at competitive prices through Amazon.  If they enter Amazon through my site, I get a small commission, and their price does not change at all.  Such a deal.


  • Bob_in_MA says:

    “Now, in the intermediate-run, most things that people are scared about don’t affect the market much.”

    Understanding this has been my biggest problem as an investor. I started reading Kindleberger on manias yesterday, and one of the potential problems he points to (in the 1980s) is the growing Federal deficit. Some are still waiting for a judgment day on that score.

    But are some of these problems that don’t seem matter in the intermediate term merely growing to a point where they matter a great deal?

    For instance, the debt level of the American household rose from ca. 45% of GDP in 1980 to 100% in 2008. For the first 25 years it was very positive for markets, and then really, really negative.

    What good to today’s investor is the advice that government deficits don’t matter if 30 years of acceptance of that perceived wisdom has led to levels that lead to a debt crisis in the next few years?

  • James Dailey says:

    Hello David,

    I’ve never met Mr. Fisher and haven’t read any of his books, but two “interactions” with him have left me completely unimpressed. First, the mutual fund he manages (PURIX) has been a poor performer over the past 10 years. Second, I watched him in a Bloomberg interview where he and Jim Rogers were “debating”. This was in the summer of 2007 and Mr. Fisher could not have been more smug, arrogant or dismissive of Jim Rogers. Given his track record (and subsequently proved to be entirely out to lunch on the emerging recession/crisis), this would be like me trying to lecture Michael Jordan about how to play basketball right after he just finished dunking over me for the first basket in our game of one on one.


    I recommend you do some reading on complex systems dynamics, as I think it would help you place these kinds of things into perspective. Two books I think do a pretty decent job describing things without the need for advanced math/science backgrounds (which I certainly don’t have) are Ubiquity by Mark Buchanan and Deep Simplicity by John Gribbin.

    A scientific phrase often used for this type of things is “critical state”. This is when a system reaches a point from which it can become very unstable. However, complex systems can grow increasingly unstable under the surface while the critical state grows increasingly more dangerous – even as things remain seemingly stable at the surface. Whether it is snow on a mountain or leverage in financial markets/system, at some point the longer the pressure is allowed to build, the more violent the “avalanche” is likely to be once the inherent instability is realized.

  • maynardGkeynes says:

    Fisher provides a useful reality check for professional investors. The problem is that his books are pitched to general readers and wreak of magical thinking. As recent events have shown, the average 401K investors problem has not been too much fear, but too little. Fearful people don’t hold Life-cycle funds with 70% equity allocations for retirees. Non-professional investors have been victimized by a mutual fund and brokerage industry that has enormous incentives to mislead them. I’m not sure where Fisher fits into all this. David comments that Fishers questions are good, and I agree. Too bad the answers turn out to be the conventional industry claptrap: basically, safe bonds bad; scary equities good. Thanks Ken, but no thanks.

  • SeanGF says:

    I normally totally ignore comments on blogs, but something about James Dailey’s struck me as off. Problem was he needed some fact checking. (Ooops!) The mutual fund he mentions, Fisher’s PURIX actually handily beats its benchmark index (world stocks) over the last ten years by 2% a year on average. You can find that on Morningstar (very easy to check). And that’s true over the last 1 and 5 years too. And world stocks handily beat the S&P 500 over that time period too.

    Just a reminder not to believe what you read in comments. Sometimes people say stuff off the cuff. I’m sure James, all respect to him, wouldn’t knowingly make up something out of whole cloth. Because people never just make stuff up to post on blog comments. (Jokes)

  • Markym says:

    Maynard, “scary” equities did great last year, 30%. Treasuries were down 10%.