Harvard MBA Indicator
Candlefocus EditorThe Harvard MBA Indicator generally produces more sell than buy signals, as more MBA graduates are typically attracted to venture out into the stock markets when they are confident of the markets and willing to accept a bit of risk. Consequently, when the proportion of graduates entering the stock market remains above 30%, it is seen as a warning signal and potential to sell stocks. On the other hand, if fewer than 10% of Harvard MBA graduates take jobs in the securities markets, then there is seen as a buying opportunity.
The Harvard MBA Indicator has been highly successful in predicting market crashes, most notably in 1987, 2000, and 2008. In 1987, the Harvard MBA Indicator revealed that nearly half of all MBAs (~45%) took finance-related jobs, a then-unprecedented number. Subsequently, the indicator correctly predicted the crash several months before it occurred. Likewise, the indicator accurately predicted the 2000 and 2008 stock market crashes several months in advance.
Overall, the Harvard MBA Indicator is an accurate market signal that has proven useful in predicting stock market and bear markets in the past. It is based on a relatively simple concept, but has nonetheless proven surprisingly successful in predicting market conditions and helping investors make sound decisions.