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Myron Scholes


Myron Scholes

Myron Scholes
Born (1941-07-01) July 1, 1941
Timmins, Ontario, Canada
Nationality Canada, United States
Field Financial economics
School/tradition Chicago School of Economics
Alma mater University of Chicago, McMaster University
Influences Milton Friedman, Merton Miller
Contributions Black–Scholes model
Awards Nobel Memorial Prize in Economics (1997)
Information at IDEAS/RePEc

Myron Samuel Scholes (;[1] born July 1, 1941) is a Canadian-American financial economist who is best known as one of the authors of the Black–Scholes equation. In 1997 he 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 1
    • Early life and education 1.1
    • Academic career 1.2
    • Investment activity 1.3
    • Recent move to Janus Capital Group and board directory activity 1.4
  • See also 2
  • References 3
  • External links 4


Early life and education

Myron Scholes was born on July 1, 1941 in Timmins, Ontario, where his family had moved during the Great Depression. In 1951 the family moved to Hamilton, Ontario.[2] Scholes was a good student[2] although fighting with 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 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

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 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.[3]

In 2012, he authored an article entitled 'Not All Growth Is Good' in George W. Bush Presidential Center.

Investment activity

In 1990 Scholes decided to get involved more directly with the financial markets and 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 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, was extremely successful in the first years, with 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 failed, becoming one of the most prominent examples of risk potential in the investment industry.

LTCM brought more problems for Scholes in 2005, when he was implicated in the case of Long-Term Capital Holdings v. United States, being accused of having used an illegal tax shelter in order to avoid having to pay taxes on profits from company investments. It was found that Scholes and his partners were not eligible for $40 million tax savings resulting from $106 million accounting losses that had no economic substance.[4][5]

Recent move to Janus Capital Group and board directory activity

Scholes, as of 2014, is Chief Investment Strategist at Janus Capital Group. 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.

See also


  1. ^ "Scholes". Retrieved October 20, 2012. 
  2. ^ a b Myron S. Scholes, "Autobiography", in The Nobel Prizes 1997, Editor Tore Frängsmyr, [Nobel Foundation], Stockholm, 1998,
  3. ^ Presentation Speech by Professor Bertil Näslund of the Royal Swedish Academy of Sciences, December 10, 1997.
  4. ^ "A Tax Shelter, Deconstructed" by David Cay Johnston, New York Times, July 13, 2003
  5. ^ "Federal judge rejects tax shelter used by Nobel winners" by Diane Scarponi, Associated Press, August 27, 2004

External links

  • Nobel e-Museum page on 1997 prize for economics
  • Platinum Grove Asset Management, company where Scholes is chairman
  • Speaker at Hedge Fund Conference
  • PBS Nova – Trillion Dollar Bet (2000)
  • Long Term Capital Holdings vs. United States"Findings and Opinion"
  • Myron S. Scholes (1941– ).  
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