One group of people does not yet seem to have caught up with the crisis in financial services – Harvard MBA graduates.
Ray Soifer, the financial analyst, has just released his annual analysis of the career paths of Harvard MBAs, which shows that a record-breaking proportion of this elite became bankers or financiers when they graduated this summer.
According to Mr Soifer, newly-released HBA data show that 41 per cent of the Harvard MBA class of 2008 chose market-sensitive careers, just above the 40 per cent record set in 2007. He defines market-sensitive sectors as investment banking, fund management, sales and trading, venture capital and private equity.
Financial services as a whole attracted 45 per cent of the 2008 graduates, up from 44 per cent in 2007, while consulting drew 20 per cent, down from 21 per cent. Other services accounted for 18 per cent and manufacturing 17 per cent, the same as last year.
While this year’s record may seem surprising, most of these career decisions were made before the market’s recent steep decline – some as early as the fall of 2007. Next year’s data should be interesting!
Mr Soifer has his own investment rule relating to the Harvard MBA programme. If 10 per cent or fewer graduates take market-sensitive jobs, that is a long-term buy sign for US equities. Conversely, when the figure rises above 30 per cent, it is a sell sign.
I wonder how close to 10 per cent the figure will get next year. I am prepared to bet a decent amount that it falls below 40 per cent.
Of course, in the broad scheme of things, it is just as well for society that banks and other financial institutions do not soak up all of the best and brightest, as they have been doing over the past few years.
That, to put it mildly, is a misallocation of human capital.
