Moshe Milevsky never intended to write another book about financial planning. But then the 42-year-old York University finance professor watched in horror as his family's net worth shrank by nearly 50 per cent in the great market crash of 2008.
It wasn't because he was highly leveraged or had taken unnecessary risks. A cautious investor, he had stacked his portfolio with stock in some of the biggest, supposedly safest, most successful American firms - GM, AIG and Lehman Brothers, among them.
To help recoup some of his losses, the industrious Mr. Milevsky - he's also executive director of the IFID (Individual Finance and Insurance Decisions) Centre and president of QWEMA (Quantitative Wealth Management Analytics Group) - returned to writing. Within a matter of months, he had produced Your Money Milestones - A Guide to the 9 Most Important Financial Decisions of Your Life (FT Press). It's his seventh book and a timely one, especially for those contemplating their annual contributions to retirement savings plans.
After all, as he notes in the introduction, if the investing wisdom of the ages was essentially rendered useless after the fall of 2008, on what should financial decisions henceforth be based?
Debt isn't evil. It's a potentially enabling tool. — Moshe Milevsky
Written during an academic sabbatical which saw Mr. Milevsky lecturing at Wharton and in Sydney, the book incorporates some of the lessons he learned from the market meltdown. Central among these is the that the old paradigm - the stock market as a casino game in which savvy investors carefully calculate the odds of any particular wager succeeding - must be discarded.
In its place is the nuclear paradigm, so-called because no historical data would be of any value in predicting the next nuclear reactor accident. It therefore abandons all possibility of determining odds. In the new investing environment, a nuclear accident can occur at any time, without warning, making bets on stocks, even blue chips, inherently unpredictable.
Moshe Milevsky, Associate Professor of Finance at the Schulich School of Business at York University and executive director of the Individual Finance Insurance Decisions Centre
