Myron Scholes on the real promise of the total portfolio approach

The real promise of the total portfolio approach is not simply greater flexibility in choosing investments, but the ability to dynamically manage risk as market conditions change.

Nobel Prize-winning economist Myron Scholes, the Frank E. Buck Professor of Finance, Emeritus, at Stanford Graduate School of Business, argued that institutional investors focus too heavily on selectivity and average returns, when managing downside risk can be critical to improving compound returns over time.

“Every period matters. There’s no long run. The long run is made of a sequence of short runs,” Scholes said, arguing that investors should dynamically adjust their risk budgets and preserve capacity to deploy capital when markets are under stress.

In this live recording from the Fiduciary Investors Symposium at Stanford University in September 2026, Scholes explores risk, drawdowns and why dynamic risk management should sit at the heart of the total portfolio approach.