This terrible video just about proves that business school makes comedy impossible.

On Monday we noted a Financial Times article reporting that business school graduates who head for private-equity firms earn much more than those who land jobs in big, publicly traded investment banks. This stuck as absolutely correct but we wondered if the story had overstated the gap between PE and investment banking pay.

According to the Financial Times, recently minted MBA’s "stand to earn more than $400,000 in salary and bonus in 2007-08, plus up to $5 million over several years depending on the fund’s performance.”
"By contrast, first-year associates with MBA degrees at big, publicly traded investment banks can expect to make $70,000 to $80,000 in base salary plus bonuses of $60,000 to $80,000, according to Eric Moskowitz of the Options Group," the article continued.

That would make for a total pay package of $160,000 at the upper levels, which seemed mighty low to us. In fact, as more than one of our commenters pointed out, that’s what first year analysts, who are mostly freshly minted college grads without higher degrees, earn at investment banks. First year associates—largely business school grads—earn much more.

We contacted the Erik Moskowitz at the Options Group to find out why the numbers seemed so off. He tells us that our impression was correct. Those numbers were too low for associates. According to Moskowitz, first year associates earn a base salary for $100,000 to $120,000k this year and can expect a bonus of $125,000 to $175,000 in 2007. That leaves a total compensation package of nearly $300,000 for the top earners. That’s not quite what their mates at PE shops are bringing home but it’s much closer than the original piece indicated.

This morning we noted that forty percent of the MBA class of 2007 from Harvard Business School headed to Wall Street to take "market sensitive" jobs. This is dire news for stocks, according to Ray Soifer. When that number climbs above 30%, the market is sending a long-term sell-signal, Soifer argues. We first hit 30% in 2005 (only 24% of the class of 2004 took such jobs), and last year's number was 37%.

Of course, skeptics of Soifer's metric might point out that the S&P 500 is up something like 25% since the sell indicator came out. But he cautions that his indicator has a lot of disadvantages: it only comes out once a year, and is intended as a long-term indicator and not a predictor of the immediate funture.

"Yet, for long-term investors who can think in terms of decades rather than months or quarters, it's worth keeping an eye on," Soifer notes. "Besides, it's fun!"

(Note: Our most loyal readers might wonder why we initially reported the number had jumped from 37% to 44% but we've now revised this year's number down to 40%. Our reason is rather simple. Soifer counts only "market sensitive" jobs in his metric, not the overall number of HBS MBAs headed to finance. Our initial report of 44% counted all finance jobs, while the 37% counted market-sensitive jobs (the over-all number in 2006 was 42%). This created the impression that the climb was even more extreme than it actually was. But, we should note, that the gap between the "market sensitive" jobs and the overall finance jobs is closing.)

The post-graduate plans of business school graduates are sometimes taken to be contrary indicators. In fact, as we pointed out a little over a year ago, a system for measuring market sell signals based on the plans of Harvard Business School grads had been designed by Ray Soifer, a retired executive from Brown Brothers Harriman. By his metric, when 10% or less of a graduating class take Wall Street jobs, it's a long-term buy signal. When 30% or more take market sensitive Wall Street jobs, it's a big flashing sell signal.

When we noted first this story, 37% of the class of 2006 had gone to market sensitive Wall Street positions. This year's number was even higher--40%. Meanwhile, following the trend of recent years, the average number of months of work experience of HBS grads slipped from 52 to 50.

And the big money is still where it was last year: private equity and other buyout firms. According to a recent Financial Times article, graduates who go to private-equity firms "stand to earn more than $400,000 in salary and bonus in 2007-08, plus up to $5 million over several years depending on the fund’s performance.”

"By contrast, first-year associates with MBA degrees at big, publicly traded investment banks can expect to make $70,000 to $80,000 in base salary plus bonuses of $60,000 to $80,000, according to Eric Moskowitz of the Options Group," Francesco Guerrera and Ben White of the Financial Times write.

(Updated Note: Those numbers seem a bit low to us. In fact, they seem to jive with what we've heard Moskowitz say about first-year Wall Street analyst pay. We've contacted the Options Group to ask about that number. Certainly, the information from top tier graduates schools--prime recruiting ground for investment banks--indicates higher numbers.)

Those numbers struck us as low, even given the current damage to bonuses most expect from the credit crunch. Indeed, the information provided by Harvard Business School itself discloses much higher base salaries

Interestingly, however, we can report that the percentage of HBS grads headed to buyout land is down a tick from last year. Thirteen percent of the class of 2006 went to buyout firms. Only 12% of the class of 2007 followed that road. We have no idea whether that means that private equity is already over or headed for a comeback.

Private equity gains ground in talent war [Financial Times]

We kid, of course. Some of our best friends are in b-school! (But only because their parents told them they had to get a graduate degree, and law school’s just so insufferably long.) Regardless of its merits, there's good news: you might actually make some money out of this racket!

Salaries and signing bonuses for newly minted MBAs nationwide were the highest last year since the data have been tracked, said Bob Ludwig, a spokesman for the Graduate Management Admission Council in McLean, Virginia. The average salary was $92,360 and the signing bonus was $17,603.

Competition for MBAs from banks such as New York-based Citigroup Inc. and Goldman Sachs Group Inc. may push starting- pay packages above last year, when graduates averaged a record $186,174 in total compensation at Harvard Business School and $183,000 at Stanford University's Graduate School of Business.

``I see the demand just going through the roof for this kind of talent,'' said Paul Danos, dean of Dartmouth's Tuck school in Hanover, New Hampshire. His MBA program ranks ninth in the world, according to the Financial Times 2007 ratings.

Recruiting grew so intense at the University of Pennsylvania's Wharton School that some companies were holding 10 to 15 events each over two months, said Michelle Antonio, director of the career management office.

And if they’re not exactly banging down your door, you can still bank on your degree making you and your bride-to-be a practical shoo-in for one of those highly coveted wedding announcement in Sunday Styles. 6-1, half a dozen to the other.

MBAs May Get Record Pay as Citigroup, Goldman Recruit [Bloomberg]

Over on Wall $treet Folly we just came across this bright and shiny news—more than half of you MBA types are effin’ cheaters!

When it comes to cheating in graduate school, a new study finds that M.B.A. students are the champs. A survey of 5,331 students at 32 graduate schools in the United States and Canada found an "alarming" amount of cheating across disciplines, but more among the nation's future business leaders. Fifty-six percent of graduate business students admitted they had cheated at least once in the last year, compared with 47 percent of non-business students.

The students, who were surveyed between 2002 and 2004, told researchers from Pennsylvania State, Rutgers and Washington State Universities that the most important reason for cheating was that they thought that other students were doing it.

It’s not hard to see how you get from “other students were doing it” to the “everyone was doing it” defense of backdating.

Survey: M.B.A. students more likely to cheat [Philadelphia Inquirer via Wall $treet Folly]

More and more of you are applying to business schools, according to Business Week. This is great news is you are a b-school administrator but is it a sign that the economy is tanking?

Applications to full-time programs have been decreasing since the all-time high seen in 2002, when the dot-com bust and September 11 had people running to B-school to weather the economic storm...Yet this year's data show applications to full-time MBA programs returning to 1999 levels, even with more candidates opting for the increasing array of flexible MBA programs being offered.

We’re fascinated by what drives b-school applications. On the one hand, you might think that higher MBA salaries would drive up applications. Afterall, the potential reward for getting an MBA would be higher. One the other hand, higher MBA salaries often reflect booming economic times, meaning the cost of leaving even pre-MBA business work to enroll in a full-time program might be greater. During a boom, the opportunity costs of pursing an MBA can be pretty steep. What’s more, if you think the business cycle might take a turn for the worse after you graduate, you’ll have missed the boom and end up looking for a job during a downturn. So it makes some sense the good economic times would drive down b-school application.

On the, well, other other hand, entering b-school when everyone else is doing it decreases your chances of getting into the most prestigious schools while driving up the number of people who will be getting MBAs at the same time you graduate. You risk facing a glut of MBAs. So shouldn’t it be better to apply when the applicant pool is thinner?

We’ve looked but haven’t found the answer to this problem. Has anyone seen a study reflecting this? Or, perhaps more importantly, is there a way to hedge b-school risk?

B-School Is Hip Again [Business Week]

Oh yes. It's the Columbia Business School rap. Words cannot do it justice.

The internet means you never get to forget.

DealBook this morning runs down which business schools have landed which commencement speakers. The clearest win is Harvard's grab of Goldman Sachs CEO Hank Paulson. Sloan MBA's will get to hear from Federal Reserve Chairman Ben S. Bernanke, but Sloan loses points since it is sharing him with the rest ofr MIT at the university-wide graduation ceremony. Columbia pulled NBC Universal's Bob Wright.

More at DealBook.

For Some M.B.A.’s, It’s Pomp, Circumstance and Hank Paulson [DealBook]

Business Week interviews Gemma Townley, novelist and soon-to-be MBA.

Like her characters, Townley has undergone many transformations over the years. She started out editing Financial Management, a magazine for finance directors, and having her work appear in the Sunday Telegraph. Then she headed communications, first for the Charter Institute of Management Accountants and then in a government department.

Finally, in 2003, she began the MBA program and launched her career as a novelist virtually at the same time. Unafraid of a busy schedule, Townley also got married just as her first module for the MBA was starting. Recently she decided to give up her corporate job to work full-time from home as a writer. She's also close to earning her MBA degree once and for all.

We hate her and love her already for all the same reasons.

The Lives and Loves of a B-School Co-ed [Business Week]