Editing Myron Scholes

{{Short description|Canadian–American financial economist}}
{{Infobox economist
| name             = Myron Scholes
| image            = Myron_Scholes_2008_in_Lindau.png
| caption          = Scholes in 2008
| birth_name       = Myron Samuel Scholes
| birth_date       = {{Birth date and age|1941|7|1|mf=y}}
| birth_place      = [[Timmins, Ontario]], Canada
| death_date       = 
| death_place      = 
| nationality      = [[Canada]], [[United States]]
| institution      = 
| field            = [[Financial economics]]
| school_tradition = [[Chicago school of economics]]
| alma_mater       = [[McMaster University]] <br/> [[University of Chicago]]
| doctoral_advisor = [[Eugene Fama]]<br>[[Merton Miller]]
| academic_advisors= 
| doctoral_students= 
| notable_students = 
| influences       = [[George Stigler]], [[Milton Friedman]]
| influenced       = 
| contributions    = [[Black–Scholes model]]
| awards           = [[Nobel Memorial Prize in Economics]] (1997)
| repec_prefix     = e
| repec_id         = psc29
}}

'''Myron Samuel Scholes''' ({{IPAc-en|ʃ|oʊ|l|z}} {{respell|SHOHLZ}};<ref>{{cite web|title=Scholes on merriam-webster.com|url=http://www.merriam-webster.com/dictionary/scholes|access-date=October 20, 2012}}</ref> born July 1, 1941) is a [[Canadians|Canadian]]–[[Americans|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 Chief Investment Strategist at [[Janus 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 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 [[Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel|Nobel Memorial Prize in Economic Sciences]] for a method to determine the value of [[derivative (finance)|derivatives]]. The model provides a conceptual framework for valuing [[Option (finance)|options]], such as [[call option|calls]] or [[put option|puts]], and is referred to as the [[Black–Scholes]] model.

==Biography==

===Early life and education===
Scholes was born to a [[American Jews|Jewish]] family<ref>[https://www.jewishvirtuallibrary.org/jsource/biography/scholes.html Jewish Virtual Library: "Myron Scholes"] retrieved March 29, 2015</ref> on July 1, 1941, in [[Timmins]], [[Ontario]], where his family had moved during the [[Great Depression]]. In 1951 the family moved to [[Hamilton, Ontario]].<ref name="nobelbio">{{Nobelprize|accessdate=2020-10-11}}</ref> Scholes was a good student<ref name="nobelbio"/> 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 C. Jensen|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 [[Doctor of Philosophy|Ph.D.]] in 1969 with a dissertation written under the supervision of Eugene Fama and Merton Miller.

===Academic career===
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.<ref>[http://nobelprize.org/nobel_prizes/economics/laureates/1997/presentation-speech.html Presentation Speech] by Professor Bertil Näslund of the Royal Swedish Academy of Sciences, December 10, 1997.</ref>

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===
[[File:SCHOLES02.jpg|thumb|Scholes, 2009]]
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 [[When Genius Failed|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 [[Substance over form|formal accounting losses]] of $106 million that represented no [[economic substance]].<ref>[https://www.nytimes.com/2003/07/13/business/a-tax-shelter-deconstructed.html "A Tax Shelter, Deconstructed"] by [[David Cay Johnston]], ''New York Times'', July 13, 2003</ref>

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.<ref>{{Cite news |title="Huang Joins Bass' Private Equity Shop" |work=Buyouts Insider |url=https://www.buyoutsinsider.com/huang-joins-bass-private-equity-shop/ |access-date=Jan 7, 2023}}</ref> 

Scholes is also chief investment strategist at [[Janus Henderson]], a role he held at legacy firm [[Janus Capital Group]] since 2014.<ref>{{Cite news |last=Comtois |first=James |date=July 8, 2014 |title=Nobel laureate Scholes among 2 joining Janus Capital Group |url=https://www.pionline.com/article/20140708/ONLINE/140709898/nobel-laureate-scholes-among-2-joining-janus-capital-group |work=Pensions & Investments}}</ref> 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.

==See also==
* [[List of economists]]
* [[List of quantitative analysts]]
* [[List of Jewish Nobel laureates]]

==References==
{{reflist}}

==External links==
{{Wikiquote}}
* {{Nobelprize}}
* [http://nobelprize.org/nobel_prizes/economics/laureates/1997/index.html Nobel e-Museum page on 1997 prize for economics]
* [https://web.archive.org/web/20131012102147/http://www.pgamlp.com/index.html Platinum Grove Asset Management], company where Scholes is chairman
* [https://web.archive.org/web/20060820084820/http://www.global-arc.net/TBC_GARCH_WEB.pdf Speaker at Hedge Fund Conference]
* [https://www.pbs.org/wgbh/nova/stockmarket/ PBS Nova – Trillion Dollar Bet (2000)]
* [https://ideas.repec.org/e/psc29.html IDEAS/RePEc]
* [http://www.usdoj.gov/tax/082704JBALongTermUS.pdf "Findings and Opinion" ''Long Term Capital Holdings vs. United States'']
* {{Cite encyclopedia |title=Myron S. Scholes (1941– ) |url=http://www.econlib.org/library/Enc/bios/Scholes.html |encyclopedia=[[The Concise Encyclopedia of Economics]] |edition=2nd |series=[[Library of Economics and Liberty]] |publisher=[[Liberty Fund]] |year=2008 }}
*{{C-SPAN|55045}}

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{{s-bef | before = [[James A. Mirrlees]] | before2 = [[William Vickrey]] }}
{{s-ttl | title = [[List of Nobel Memorial Prize laureates in Economics|Laureate of the Nobel Memorial Prize in Economics]] | years = 1997 |alongside= [[Robert C. Merton]] }}
{{s-aft | after = [[Amartya Sen]] }}
{{s-end}}

{{Nobel laureates in economics 1976-2000}}
{{1997 Nobel Prize winners}}
{{Chiconomists}}

{{Authority control}}

{{DEFAULTSORT:Scholes, Myron}}
[[Category:1941 births]]
[[Category:Nobel laureates in Economics]]
[[Category:American Nobel laureates]]
[[Category:Canadian Nobel laureates]]
[[Category:Living people]]
[[Category:McMaster University alumni]]
[[Category:Jewish American economists]]
[[Category:Jewish Canadian scientists]]
[[Category:Long-Term Capital Management]]
[[Category:Financial economists]]
[[Category:People from Hamilton, Ontario]]
[[Category:People from Timmins]]
[[Category:Scientists from Ontario]]
[[Category:University of Chicago alumni]]
[[Category:MIT Sloan School of Management faculty]]
[[Category:Fellows of the Econometric Society]]
[[Category:Fellows of the American Academy of Arts and Sciences]]
[[Category:National Bureau of Economic Research]]
[[Category:20th-century Canadian scientists]]
[[Category:21st-century Canadian scientists]]
[[Category:Presidents of the American Finance Association]]