Sell Now: Harvard MBAs Are Flocking to Wall Street

Posted by: Louis Lavelle on November 26, 2008

Back on Sept. 19, I blogged about “Harvard’s Crystal Ball“—an index created by consultant Ray Soifer that uses the percentage of Harvard MBAs entering “market-sensitive” jobs to determine the future of the stock market.

At the time, Harvard had not yet released its 2008 MBA hiring statistics. But now they have, and the index is once again screaming “sell!!!”

As reported in the New York Times, a record 41% of Harvard MBA grads took market-sensitive jobs at investment banks, hedge funds, private equity, and venture capital, among others, up from 40% in 2007, which was a record at the time.

Soifer's index has been sending a strong sell signal since 2005 and probably will be for a good long time, since Soifer considers a buy signal to be anything less than 10% of Harvard MBAs taking market-sensitive jobs. I'm not sure what to make of 41%. Is it a fluke--the result of many 2008 grads missing the worst of the Wall Street implosion? Or is it a sign that there might be more pain to come?

Thoughts?

Reader Comments

JKurth

December 3, 2008 12:14 PM

I don't get it... Is a higher percentage of Harvard MBA grads flocking to "market sensitive" jobs a good sign for the market or a bad one? When you say "sell signal", it makes me think this does not bode well for Wall Street and I should abandon my financial interests there. Wouldn't a higher percentage of grads taking market-sensitive jobs indicate increasing stability and opportunity because Wall Street is hiring? Or are HBS grads brought on to do the dirty work of cutting heads and implementing new efficiencies? Please expound on your post. Thanks.

Louis

December 3, 2008 12:36 PM

Thanks for the note. Harvard MBAs flocking to market sensitive jobs is a bad sign for the market, in Soifer's view. I think the logic behind Soifer's research is that Harvard MBAs (or any MBAs for that matter) will flock to market sensitive jobs when market sensitive jobs are paying a bundle, which tends to coincide with the kind of run-up in the market which usually precedes a fall. The implication is that by the time MBAs figure out these jobs are a good deal, they're usually not for much longer. I wouldn't put too much stock in Soifer's research, though. If you did you would have sold all your stock years ago and missed one of the great (if misbegotten) bull markets of all time.

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