Expectations Investing: Reading Stock Prices for Better Returns.

• Position: Book Shelf

By Alfred Rappaport and Michael J. Mauboussin. Harvard Business School Press, 224 pages. $29.95.

Simple idea, complex explanation. Expectations Investing's themes can be summarized readily, but turning them into practice is another thing. It's a bit like a ballet dancer turning to the audience after doing a jete and saying, "Now you do it."

Authors Rappoport and Mauboussin -- respectively, a professor emeritus at Northwestern University's Kellogg School of Management, and chief U.S. investment strategist at Credit Suisse First Boston -- argue that the stock market's pricing holds the key to assessing where a stock will go. In fact, they write, "stock prices are gifts of information -- expectations -- waiting for you to unwrap and use. If you've got a fix on current expectations, then you can figure out where they are likely to go."

Well, it's a tad more complicated than that. Fundamentally, the authors advocate...