Errors and Corrections

September 25, 2007

It has been brought to my attention that there is an error in the account of my submission of the paper published in the September 1964 Journal of Finance, "Capital Asset Prices: A Theory of Market Equilibrium Under Conditions of Risk". In his 1992 book, Capital Ideas, (pp. 194-195) Peter Bernstein states that in 1963 the paper "... was quickly rejected by the editor of the Journal, Dudley Luckett of Iowa State University, acting on the advice of a referee. Luckett told Sharpe that his assumption that all investors made the same predictions was so 'preposterous' as to make his conclusions 'uninteresting'." In a footnote, Peter attributes this information to personal correspondence and interviews with me. The book goes on to say that I revised the paper, the editorship of the Journal changed hands and that the paper was finally published in 1964.

It is true that the initial referee for the paper recommended that it not be published, mainly on the grounds that the assumption that all investors agree on probabilistic estimates of future returns was too unrealistic. It is also true that there was correspondence back and forth concerning the paper and that it was finally accepted after a change in editorship. However, attributing either the initial rejection or the final acceptance to Dudley Luckett was an error, since he did not assume the editorship of the Journal of Finance until 1967.

A am very sorry that this error occurred and extend my apology to Professor Luckett, who served with great distinction as editor of the Journal.