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Harvard MBA Indicator

This is a long-term indicator founded in quite a bit of logic. It looks at the percentages of Harvard Business school graduates entering into various market-sensitive jobs, such as investment banking, private equity and securities trading. The indicator signals investors to exit the market if more than 30 percent of graduates take these jobs, while investors should go long if less than 10 percent of graduates move into these fields.

The indicator is meant to demonstrate long-term trends based on the attractiveness of Wall Street jobs. The idea is that the more Harvard grads entering the financial job market, the more likely the market is nearing a top, or building a bubble that is about to burst. Conversely, when markets are lagging, fewer want to enter Wall Street and it may indicate a buying opportunity.

The indicator was created by Roy Soifer, a Harvard business graduate. In 1987 and 2000, Soifer’s index gave sell signals, and the S&P moved +2.04 percent and -9.78 percent respectively. However, the 1987 call seems rather prophetic, given the stock market crash that Fall.

Photo: Matthew Boyer