MBA's As Leading Indicators of Financial Ruin

MBA candidates are either hot or not.  That means they are in demand or not in demand.  Now and for the past few years they have been hot due to the hot economy.  When I went to grad school they, or we, were not as the country was in a major recession.  But that's old history so let's look at what Forbes magazine has caught as a leading indicator of future financial trouble.

Seems MBA's are getting the last ticket on the Titanic.  By that we mean that MBA's take jobs in hot industries just before they go cold, or in some cases, out of business.  Forbes took a look at University of Pennsylvania Wharton School of Business grads and their job choices. 

In 2000, 17% of the grads took Silicon Valley jobs.  Bad timing there.  In 2001, 30% of the grads took investment banking jobs just before Wall Street "laid off tens of thousands of bankers over the next two years." 

So where are the grads and near grads heading now and have been for the past few years?  Private equity.  Private equity is hedge funds and non stock money buying out publicly traded companies and taking them 'private.'  Like a bunch of retailers including Nieman Marcus.  Burger King went private and then public.

The issue is not private equity.  The question is "Do MBA's head for the hot stuff just as it turns cold? " Hedge funds are super hot but the returns are beginning to sour.  And the folks that picked Silicon Valley and investment banking have had some serious career bumps.

So what is a MBA to do?  Go where the hot money is or look elsewhere?  I don't know as when I was in the job market it was take just about anything that came your way. 

But some advice for today's MBA's.  At least take a look at something out of favor.  I worked at a small, now large, pharmaceutical.  The chairman related his job search when he was at Harvard.  ATT or the small pharmaceutical.  Flew down to the start-up, saw the crummy plant, the two owners who were kind of nuts.  Got back on the plane to Boston and took out a piece of paper.  Two columns--pro and con.  The cons were easy, had a whole list in two minutes.  He had one pro- Opportunity.

Got home, went in the door, turned to his wife and she said, "Oh, no, you took the job in Texas."  Yep.  Lots of risk but he ended up chairman.

Not advocating it but take a look at your options and maybe give your ticket to somebody else.  Look at what happened to Jack.

Comments

[John M]

MBA's are looking to maximize opportunity and security. The conondrum is that you can not do both. In the MBA program the focus is on new ideas and hot industries. Since many MBA's have a limited job history they tend to overestimate the stability of hot industries.

I think that a historical perspective of business should be included in all MBA programs.