Stock market and slam dunks: Meet the stock picking youth basketball team
Visit any Brooklyn park on a nice day, and it’s clear basketball is a pretty big deal.
Ralph Baker, Jr., 47, and his son, Ralph III, 19, are huge fans, too. Both grew up playing the game. But a few years ago, the elder Baker decided to combine basketball with another passion of his -- finance.
He coached and mentored his son’s traveling basketball team in a community league from 2006 through 2013, and made a point to teach the kids about the economy and stock market. Their name? The New York Shock Exchange.
Ralph III, now studying engineering at Lehigh University, was just as surprised as his teammates when his father announced financial literacy education would be required in addition to practices and game attendance.
“We were all sort of a little apprehensive at first. I can remember us gathered around, like, ‘What is this?’ And they’re looking at me, and I’m looking at them, like, ‘I don’t know. I know no more than you guys do!’ he remembered. “It was definitely a struggle to get everybody gung ho about it at first.”
Coach Baker wanted to pass along a lesson his father had given him.
“When I was in the fifth grade, my dad taught me to read the Wall Street Journal. [I’d] have to have something coherent to tell my father when he got home, and he would just drill me on [the paper] five days a week,” he said.
Something must have clicked because Baker studied economics and earned an MBA. He worked in corporate finance for 15 years, most recently at Ernst & Young in transaction services.
Baker believed middle schoolers were the perfect students to study the economy and stock picking because they don’t know to approach it carefully or with fear, the way some novice adult investors may.
“They have no preconceived notions, and I think if you wait until someone’s in their 20s, they’re going to be intimidated by it. They’re just going to say forget it,” he explained. “For most of these kids, other than their house, their biggest asset is going to be their 401(k). How well they live in retirement...is going to be based on how well they pick stocks or pick funds within their 401(k) plan.”
Baker started out with the fundamentals, explaining what stocks are, how the market works and strategies for choosing a stock. The kids turned out to be surprisingly astute stock analysts. When he asked the team to pick stocks to track, they chose Apple (AAPL) and GameStop (GME). Baker also selected a stock, Phoenix Companies (PNX), a financial services firm.
A year later, Apple had a 115% return, GameStop had an 82% return, and Baker's stock dropped 1%.
“Kids are always trying something new, and in a lot of ways, they’re trend setters so they’re good at finding the next growth industry, the next growth business, before adults do,” Baker said.
Since the students graduated last year, Baker has taken a break from coaching, but he plans to get a new team together soon.
“We’ll have trials probably in January of next year, and we’ll start up again,” he said.
