Harvard's Crystal Ball

Posted by: Louis Lavelle on September 19, 2008

Famous last words: “Tune in next year and find out!”

Those words, uttered on Oct. 15, 2007, turned out to be quite prophetic. The speaker was Ray Soifer, a consultant (Harvard MBA 1965), who for many years has been keeping track of the percentage of Harvard MBA graduates choosing careers in Wall Street and related market-sensitive fields. It was his belief that if 10% or less of the year’s class took such jobs, it’s a long-term buy signal—clear sailing all the way. But if 30% or more do, then it’s a long-term sell signal.

In 2007, Harvard MBAs entering i-banking, investment management, hedge funds, sales & trading, venture capital, private equity, and LBOs hit a record 40% of the graduating class, up from 37% in 2006 and 30% in 2005. And sure enough, one year later, here we are in the midst of the worst financial crisis since the Great Depression.

Coincidence? Soifer thinks not. "Here we are," he says, with characteristic understatement. "The market is down."

Peering into Harvard's crystal ball, what does Soifer see for the year ahead? The crystal ball ain't saying. For one thing, the job numbers from Harvard won't be out for another few weeks. And when the do come out, they're likely to be skewed by the fact that a lot of students with their eyes on the Wall Street prize may have settled for lesser jobs, as one Wall Street giant after another imploded.

Don't expect a "buy" signal though. The last time that happened was in the early 1980s, when the Dow traded below 1,000. And the biggest "buy" signal of them all? That came in 1937 when three Harvard Business School grads, or about 1%, took Wall Street jobs. A few years later, the U.S. emerged from the Great Depression.

Reader Comments

Zack

December 4, 2008 3:30 PM

Suggesting that Harvard MBAs are short term investors

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Read daily reports from BusinessWeek editors and reporters Louis Lavelle, Geoff Gloeckler, Alison Damast and Francesca Di Meglio and boost your chances of getting into your best-fit B-school.

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