A Contrary Indicator on M.B.A.’s and Stocks
dealbook.nytimes.com
dealbook.nytimes.com
I also posted a comment there which I will reproduce below:
The MBA index truly is one of the greatest contra-indicators I have ever had the pleasure of observing first hand. It's a wonder to behold.
> When expensively educated, fashionable young graduates start showing up in your field, you're in a bubble.
- Kevin Marks, http://epeus.blogspot.com.au/2005/12/key-indicator-for-bubbl..., derived from Liar's Poker (highly recommended read), by Michael Lewis (brilliant author; read his other books).
> This year, some 37% of Harvard Business School's graduate found work on Wall Street, up from 30% a year ago and 26% for the Class of 2004. The trend suggests that Wall Street is becoming bloated and the American economy is ripe for a slowdown.
Mr. Soifer, who retired from Brown Brothers in 2000 and now runs his own consulting firm, appears to be on to something. He advised his friends and colleagues to sell back in 2000, when 30% of the HBS graduating class took jobs on Wall Street. Before that, the last long-term sell he sent was in 1987.
Source: http://www.nysun.com/business/equities-swing-with-harvard-mb...
> Mr. Soifer notes that the Harvard M.B.A. indicator has historically been more prolific as a source of “sell’ signals, showing strong results in 1987, 2000-02, and 2005-08, than “buy” signals. In fact, the last time it reached the 10 percent “buy” level was in the early 1980s, when the Dow Jones industrial average traded below 1,000.
The all-time low was reached in 1937, when only three graduates — about 1 percent — braved the market and ventured into the securities industry.
Source: http://dealbook.nytimes.com/2009/11/05/a-contrary-indicator-...
Connection and passion for an industry is not a prerequisite for success. Passion comes and goes, both in intimate relationships and professional ones. Passion in your life is something you nurture and develop over time, and with the right set of mental habits and the appropriate circumstances, you can fall in love with something after you've chosen it. I tend to suspect anyone who discounts business people from the tech industry of not fully understanding what business people do and the value that they provide, and so defaulting to gut instinct based on projections of their own feelings.
As for hoping that tech can survive this dilution effect, what is tech? Do you mean the technology community, which for the most part is very segregated between engineering and sales and operations? An influx of business-minded people isn't likely to affect the engineering side of the community. If you mean technology companies, they will continue to hire the talent they need, and if anything a greater supply of talented individuals is a good thing.
And that signal was wrong. If you looked at this last year and sold, you would have missed out on a 20% rise in stock prices. So, another indicator that goes in the "big maybe" pile.