Roundball Round Lots - Page 2 of 6

Roundball Round Lots

learn about investing, Baker began recruiting players from his son’s recreational basketball league. At first, parents were skeptical. “They were wondering if I was serious or not,” says the single dad who lives with his son in Brooklyn, New York. “They asked me how the process was going to work, where were we going to travel to, how was I going to teach them about investing.” Even Ralph III was cynical. “When I told my son I was starting the New York Shock Exchange, he said it was the dumbest name he had ever heard and said he wasn’t going to play,” laughs Baker. The Shock Exchange, organized as a 501(c)3 nonprofit, played its first game in the summer of 2006 with eight players on the team.

Marilyn Weaver Fox and her husband, Colin Fox, wanted their son Garrett, 13, to learn how to invest and save. “Because I’m an entrepreneur, I immediately wanted Garrett to be a part of this team,” says Colin. His wife adds: “To be on a team with an investment component teaches him finance management–and that is applicable no matter what he does.” She also says that Garrett and his friends now follow stocks together. “He is very interested in how to invest and what investments are more lucrative than the next.”

“The goal is to provide the students with information about investing that they can process,” says Shock Exchange board member David Neverson, an associate at ICV Capital Partners L.L.C. in New York City (No. 7 on the BE PRIVATE EQUITY FIRMS list with $443million in capital under management). “We’re helping them think logically about investing in a company.” At the first formal investment meeting of the Shock Exchange in July 2006, the team–currently comprised of nine students–decided to invest in Apple Inc. and video game retailer GameStop Corp. The priority of the program is not for students to make a profit from the investments, but rather to learn the basics of investing. For the first venture, Baker put up $900 of his own money–$300 in each company, plus another $300 in Baker’s pick, life insurance provider Phoenix Companies Inc.–so the kids could track the stocks’ performance. A year later, Apple shares had posted returns of 112%, GameStop brought back 82%, and Phoenix Companies fell just 1%. The younger Ralph says the team decided to invest in Apple because the kids saw its products being used everywhere. “Everyone you see is listening to iPods,” says the savvy 13-year-old. His father spells it out. “A lot of kids in New York think they’re hustlers. If you are a real hustler or someone who is real savvy, instead of wearing the hottest trend, why not invest in the hottest trend?” asks Baker. “That’s really the whole point of this. The kids Know what the hottest trends are. I don’t. Why not say, ‘Hey, this is what everybody is buying.’ Why not look up the stock?”

When choosing stocks, Baker and the other board members make sure the