Canadian?American financial economist
Myron Samuel Scholes
(
SHOHLZ
;
[1]
born July 1, 1941) is a
Canadian
?
American
financial economist
. Scholes is the Frank E. Buck Professor of Finance, Emeritus, at the
Stanford Graduate School of Business
, Nobel Laureate in Economic Sciences, and co-originator of the
Black?Scholes options pricing model
. Scholes is currently the chairman of the Board of Economic Advisers of Stamos Capital Partners. 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 and the Cutwater Advisory Board. He was a principal and limited partner at
Long-Term Capital Management
(LTCM), a highly leveraged hedge fund that collapsed in 1998, and a managing director at
Salomon Brothers
. Other positions Scholes held include the Edward Eagle Brown Professor of Finance at the University of Chicago, senior research fellow at the Hoover 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 with
Robert C. Merton
? was awarded the
Nobel Memorial Prize in Economic Sciences
for a method to determine the value of
derivatives
. The model provides a conceptual framework for valuing
options
, such as
calls
or
puts
, and is referred to as the
Black?Scholes
model.
Biography
[
edit
]
Early life and education
[
edit
]
Scholes was born to a
Jewish
family
[2]
on July 1, 1941, in
Timmins
,
Ontario
, where his family had moved during the
Great Depression
. In 1951 the family moved to
Hamilton, 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 the
stock market
while he was in high school.
After his mother died from cancer, Scholes remained in Hamilton for undergraduate studies and earned a
Bachelor's degree
in economics from
McMaster University
in 1962. One of his professors at McMaster introduced him to the works of
George Stigler
and
Milton Friedman
, two
University 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 with
Michael Jensen
and
Richard Roll
, and he had the opportunity to study with
Eugene Fama
and
Merton Miller
, researchers who were developing the relatively new field of
financial economics
. He earned his
MBA
at the
Booth School of Business
in 1964 and his
Ph.D.
in 1969 with a dissertation written under the supervision of Eugene Fama and Merton Miller.
Academic career
[
edit
]
In 1968, after finishing his dissertation, Scholes took an academic position at the
MIT Sloan School of Management
. Here he met
Fischer Black
, who was a consultant for
Arthur D. Little
at the time, and
Robert 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 the
University 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 the
Center for Research in Security Prices
, helping to develop and analyze its famous database of high frequency stock market data.
In 1981 he moved to
Stanford University
, where he remained until he retired from teaching in 1996. Since then he holds the position of
Frank E. Buck
Professor of Finance
Emeritus
at Stanford. While at Stanford his research interest concentrated on the economics of
investment banking
and tax planning in
corporate 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' in
The 4% Solution: Unleashing the Economic Growth America Needs
, published by the
George W. Bush Presidential Center
.
Investment activity
[
edit
]
In 1990 Scholes became more involved directly with the financial markets. He went to
Salomon 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, including
John Meriwether
, the former vice-chairman and head of bond trading at Salomon Brothers, and his future Nobel Memorial Prize co-winner
Robert C. Merton
, and co-founded a
hedge fund
called
Long-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 the
1997 Asian financial crisis
and the
1998 Russian financial crisis
the highly leveraged fund in 1998 lost $4.6 billion in less than four months and
collapsed 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 of
Long-Term Capital Holdings v. United States
. The firm's corporate structure and accounting had established an offshore
tax shelter
to avoid taxes on investment profits. Courts disallowed the firm's claim of $40 million in tax savings, finding it based on
formal accounting losses
of $106 million that represented no
economic substance
.
[5]
Subsequent to LTCM, in 1999 Scholes joined Oak Hill Capital, the private equity firm led by
Robert Bass
. There, Scholes and his LTCM colleague, Chi-Fu Huang, launched a new hedge fund, Oak Hill Platinum Partners.
[6]
Other interests and roles
[
edit
]
| This section needs to be
updated
.
Please help update this article to reflect recent events or newly available information.
(
April 2024
)
|
Scholes is also chief investment strategist at
Janus Henderson
, a role he held at legacy firm
Janus Capital Group
since 2014. Janus Capital merged with
Henderson 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. He also serves on the boards of the Chicago Mercantile Exchange and Dimensional Fund Advisors. Scholes is currently the chairman of the Board of Economic Advisers of Stamos Capital Partners.
See also
[
edit
]
References
[
edit
]
- ^
"Scholes on merriam-webster.com"
. Retrieved
October 20,
2012
.
- ^
Jewish Virtual Library: "Myron Scholes"
retrieved March 29, 2015
- ^
a
b
Myron Scholes
on Nobelprize.org
, accessed 11 October 2020
- ^
Presentation Speech
by Professor Bertil Naslund of the Royal Swedish Academy of Sciences, December 10, 1997.
- ^
"A Tax Shelter, Deconstructed"
by
David Cay Johnston
,
New York Times
, July 13, 2003
- ^
"
"Huang Joins Bass' Private Equity Shop"
"
.
Buyouts Insider
. Retrieved
Jan 7,
2023
.
External links
[
edit
]
|
---|
1969?1975
| |
---|
1976?2000
| |
---|
2001?present
| |
---|
|
---|
International
| |
---|
National
| |
---|
Academics
| |
---|
Other
| |
---|