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Saturday, March 03, 2007

Interview With Myron Scholes

Holman Jenkins recently conducted a must-read interview of Nobel Prize Winner Myron Scholes. It's available in today's OpinionJournal.com. Here are a few choice nuggets:
...Why can't things always be smooth and nice and predictable? Myron Scholes, operator of the hedge fund Platinum Grove Asset Management, says you wouldn't like it if they were.

...Start with the commonplace that risk is one side of a coin whose other side is reward. "We all have a taste for it," he says. "In life, it would be kind of boring if there was no risk. On the other hand if there's too much risk, too much uncertainty, too much chaos, we can't handle it either. We simultaneously want order and disorder, simultaneously want risk and quiescence."
And my favorite, when asked about the now-famous (infamous?) Long Term Capital Management failure (note: emphasis is mine)
He readily acknowledges that the episode was financially and personally embarrassing: "In life you pay tuition, right? Sometimes you pay too much tuition. Sometimes learning is costly."
Read the whole thing here. All in all, it's a fascinating look at one of the most influential financial thinkers of our times, and an easy read to boot.

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