William Sharpe

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William Sharpe
Occupation Professor of Finance, Emeritus
Employer Stanford University
Website www.stanford.edu

William F. Sharpe, financial economist, is STANCO 25 Professor of Finance, Emeritus, at Stanford University. In 1990, he shared the Nobel Prize in economics with Merton Miller and Harry Markowitz for ground-breaking work in financial economic theory that helped usher in the modern era of risk management.

Background

Sharpe was one of the originators of the Capital Asset Pricing Model and developed the Sharpe Ratio, an analysis of investment performance that he introduced as the Reward-to-Variability Ratio in a January 1966 paper, “Mutual Fund Performance,” but which others gave the "Sharpe Ratio" name that has become synonymous with evaluating money manager performance.

As a pioneer in analyzing mutual fund performance and the balance between risk and return going back to the 1950s, Sharpe also developed the binomial method for the valuation of options, the gradient method for optimizing asset allocation and returns-based style analysis for evaluating investment funds. He was an early computer programmer and teacher and was one of the first to recognize the value of applying technology to financial analysis and portfolio management.

In 1996, Sharpe co-founded Financial Engines, a firm that provides online investment advice and management for individuals, currently working with nearly a thousand large employers with three million employees.

He has written seven books on portfolio theory, asset allocation and investment fundamentals. His most recent book, published in 2007, titled Investors and Markets: Portfolio Choices, Asset Prices, and Investment Advice (Princeton University Press)[1], Sharpe shows that investment professionals cannot make good portfolio choices unless they understand the determinants of asset prices. Until now, asset-price analysis has been largely inaccessible to everyone except PhDs in financial economics. Based on a lecture he gave at Princeton, Sharpe’s book details his approach to asset pricing in a nonmathematical form.

In 2005, Sharpe was the first recipient of the Fred Arditti Innovation Award presented by the Chicago Mercantile Exchange Center for Innovation, which was established in 2003 to identify, showcase and foster examples of significant innovation and creative thinking. The award annually honors an individual or group whose innovative ideas, products or services have created significant change to markets, commerce and trade. [2]

Education

References

  1. "Sharpe Writes Asset Modeling Book Coupled with Free Computer Program". Stanford Business Magazine, Feb. 2007.
  2. "Innovation in Action". Chicago Mercantile Exchange.