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Schulich prof’s book refutes mainstream financial rules

Schulich prof’s book refutes mainstream financial rules

Calling Moshe Milevsky’s views on personal finances unconventional is an understatement, wrote USA Today March 11 in a review of Your Money Milestones, the latest book by the professor of finance in the Schulich School of Business at York University.

Before you dismiss Milevsky’s views as nutty, think about this: How well did following the conventional wisdom work for you in 2008 and early 2009?

Milevsky confesses that mainstream financial planning rules caused half of his family’s net worth to disappear between November 2007 and mid-March 2009. He bought and held onto an ultra-low-cost, globally diversified portfolio that included stocks of solid companies. “I lost hundreds of thousands of dollars by doing everything exactly right,” he says.

The experience caused Milevsky to rethink everything about money.

In the past, he thought about markets as a kind of roulette wheel. With enough data about historical behaviour and outcomes, the argument went, you could predict the odds of success and make money with reasonable confidence.

Today, he takes the nuclear approach. You can’t predict a nuclear accident using history or statistics, and you can’t predict the next market meltdown. What you should do, Milevsky says, is concede that the future is unpredictable and then manage your most important financial decisions with clear-headed math.

You’ve probably never read a personal finance book like this one, unless it was Moshe Milevsky’s earlier book, Are You a Stock or a Bond? Milevsky challenges a lot of conventional wisdom about money, and even when he concurs with mainstream advice, he tends to do so for reasons that are different than you might expect, wrote MSN Money March 11.

    Some background: Milevsky is a finance professor in Toronto’s Schulich School of Business at York University and a bit of a rock star in financial-planning circles for his work on annuities, risk management and retirement planning.

    This book is like a brisk walk for your brain. You may not agree with all of his conclusions, but you’ll consider some new concepts, and you certainly won’t be bored by yet another rehash of the same old advice.

    Republished courtesy of YFile – York University’s daily e-bulletin.