Myron Scholes | |
|---|---|
 Scholes in 2008 | |
| Born | Myron Samuel Scholes (1941-07-01)July 1, 1941 (age 84) Timmins, Ontario, Canada |
| Nationality | Canada,United States |
| Academic background | |
| Alma mater | McMaster University University of Chicago |
| Doctoral advisor | Eugene Fama Merton Miller |
| Influences | George Stigler,Milton Friedman |
| Academic work | |
| Discipline | Financial economics |
| School or tradition | Chicago school of economics |
| Notable ideas | Black–Scholes model |
| Awards | Nobel Memorial Prize in Economics (1997) |
| Website | |
Myron Samuel Scholes (/ʃoʊlz/SHOHLZ;[1] born July 1, 1941) is aCanadian–Americanfinancial economist. Scholes is the Frank E. Buck Professor of Finance, Emeritus, at theStanford Graduate School of Business, Nobel Laureate in Economic Sciences, and co-originator of theBlack–Scholes options pricing model. Scholes is currently the Chief Investment Strategist atJanus Henderson. Previously he served as the chairman of Platinum Grove Asset Management and on the Dimensional Fund Advisors board of directors, American Century Mutual Fund board of directors, chairman of the Board of Economic Advisers of Stamos Capital Partners, and the Cutwater Advisory Board. He was a principal and limited partner atLong-Term Capital Management (LTCM), a highly leveraged hedge fund that collapsed in 1998, and a managing director atSalomon Brothers. Other positions Scholes held include the Edward Eagle Brown Professor of Finance at the University of Chicago, senior research fellow at theHoover Institution, director of the Center for Research in Security Prices, and professor of finance at MIT's Sloan School of Management. Scholes earned his PhD at the University of Chicago.
In 1997, Scholes – together withRobert C. Merton – was awarded theNobel Memorial Prize in Economic Sciences for a method to determine the value ofderivatives. The model provides a conceptual framework for valuingoptions, such ascalls orputs, and is referred to as theBlack–Scholes model.
Scholes was born to aJewish family[2] on July 1, 1941, inTimmins,Ontario, where his family had moved during theGreat Depression. In 1951 the family moved toHamilton, Ontario.[3] Scholes was a good student[3] although fighting with his impaired vision starting with his teens until finally getting an operation when he was twenty-six. Through his family, he became interested in economics early, as he helped with his uncles' businesses and his parents helped him open an account for investing in thestock market while he was in high school.
After his mother died from cancer, Scholes remained in Hamilton for undergraduate studies and earned aBachelor's degree in economics fromMcMaster University in 1962. One of his professors at McMaster introduced him to the works ofGeorge Stigler andMilton Friedman, twoUniversity of Chicago economists who would later both win Nobel prizes in economics. After receiving his B.A. he decided to enroll in graduate studies in economics at the University of Chicago. Here, Scholes was a colleague withMichael Jensen andRichard Roll, and he had the opportunity to study withEugene Fama andMerton Miller, researchers who were developing the relatively new field offinancial economics. He earned hisMBA at theBooth School of Business in 1964 and hisPh.D. in 1969 with a dissertation written under the supervision of Eugene Fama and Merton Miller.
In 1968, after finishing his dissertation, Scholes took an academic position at theMIT Sloan School of Management. Here he metFischer Black, who was a consultant forArthur D. Little at the time, andRobert C. Merton, who joined MIT in 1970. For the following years Scholes, Black and Merton undertook groundbreaking research in asset pricing, including the work on their famous option pricing model. At the same time, Scholes continued collaborating with Merton Miller and Michael Jensen. In 1973 he decided to move to theUniversity of Chicago Booth School of Business, looking forward to work closely with Eugene Fama, Merton Miller and Fischer Black, who had taken his first academic position at Chicago in 1972 (although he moved two years later to MIT). While at Chicago, Scholes also started working closely with theCenter for Research in Security Prices, helping to develop and analyze its famous database of high frequency stock market data.
In 1981 he moved toStanford University, where he remained until he retired from teaching in 1996. Since then he holds the position ofFrank E. Buck Professor of FinanceEmeritus at Stanford. While at Stanford his research interest concentrated on the economics ofinvestment banking and tax planning incorporate finance.
In 1997 he shared the Nobel Memorial Prize in Economics with Robert C. Merton "for a new method to determine the value of derivatives". Fischer Black, who co-authored with them the work that was awarded, had died in 1995 and thus was not eligible for the prize.[4]
In 2012, he authored an article entitled 'Not All Growth Is Good' inThe 4% Solution: Unleashing the Economic Growth America Needs, published by theGeorge W. Bush Presidential Center.
In 1990 Scholes became more involved directly with the financial markets. He went toSalomon Brothers as a special consultant, then becoming a managing director and co-head of its fixed-income-derivative group. In 1994 Scholes joined several colleagues, includingJohn Meriwether, the former vice-chairman and head of bond trading at Salomon Brothers, and his future Nobel Memorial Prize co-winnerRobert C. Merton, and co-founded ahedge fund calledLong-Term Capital Management (LTCM). The fund, which started operations with $1 billion of investor capital, performed extremely well in the first years, realizing annualized returns of over 40%. However, following the1997 Asian financial crisis and the1998 Russian financial crisis the highly leveraged fund in 1998 lost $4.6 billion in less than four months andcollapsed abruptly, becoming one of the most prominent examples of risk potential in the investment industry.
LTCM brought legal problems for Scholes in 2005 in the case ofLong-Term Capital Holdings v. United States. The firm's corporate structure and accounting had established an offshoretax shelter to avoid taxes on investment profits. Courts disallowed the firm's claim of $40 million in tax savings, finding it based onformal accounting losses of $106 million that represented noeconomic substance.[5]
Subsequent to LTCM, in 1999 Scholes joined Oak Hill Capital, the private equity firm led byRobert Bass. There, Scholes and his LTCM colleague, Chi-Fu Huang, launched a new hedge fund, Oak Hill Platinum Partners.[6]
Scholes is also chief investment strategist atJanus Henderson, a role he held at legacy firmJanus Capital Group since 2014.[7] Janus Capital merged withHenderson Group in 2017 to form Janus Henderson. In this role, he leads the firm's evolving asset allocation product development efforts and partners with the investment team contributing macro insights and quantitative analysis specific to hedging, risk management and disciplined portfolio construction.
, accessed 11 October 2020
| Awards | ||
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| Preceded by | Laureate of the Nobel Memorial Prize in Economics 1997 Served alongside:Robert C. Merton | Succeeded by |
