Quantcast
Monday, October 22nd, 2012 at 3:25 pm  |  66 responses

Q+A: Ralph Baker

Discussing his new book, Shock Exchange, and the intersection of basketball and economics.

by Eldon Khorshidi | @eldonadam

Very seldom do the worlds of basketball and economics intersect. Sure, the NBA, like any other business, is directly affected by economic underperformance. Attendance falters, TV deals decrease and team owners lose money. And when total revenue—or Basketball Related Income—takes a hit, the salary cap lowers and player incomes decrease, too.

But in a general sense, GDP growth or the unemployment rate or the state of the housing market isn’t usually associated with sports. Over the past few weeks, as Barack Obama and Mitt Romney’s economic policies have been discussed ad nauseum, not once has basketball been mentioned. Not as a reference point, to connect any set of imaginary dots, as part of a larger narrative or otherwise.

That’s why Ralph Baker’s new book, Shock Exchange: How Inner-City Kids From Brooklyn Predicted The Great Recession And The Pain Ahead is so unique and, to those who have an interest in both finance and basketball, refreshing.

In Shock Exchange, Baker—a former standout D-III point guard who holds an MBA from the University of Virginia —uses basketball as a tool for financial literacy. In 2006, while working as a day trader in New York City, Baker founded a mentorship program/travel AAU team called the NY Shock Exchange, which essentially taught middle schoolers the basics of analyzing the economy and the stock market. Before and after practice, Baker would hold learning sessions, and through PowerPoint presentations and simplified readings, the kids gradually learned the fundamental principles of economics.

Within a few months, Baker noticed that his players—cognizant of it or not—astutely recognized trends before the outside world caught on. When the coaching staff would be discussing stocks amongst themselves, the kids would increasingly interject their own two cents, and it didn’t take long for Baker to realize his players were onto something.

“It all started with one of the kids coming up to me and saying, ‘Hey Coach, you should invest in Apple. I love my iPod!’” Baker recalls. “And I just laughed him off because, well, at that point I thought Microsoft was going to put Apple out of business, like they did with everybody else. But soon enough, Apple became one of the largest companies in the world, in terms of market capitalization. And it turned out that a lot of the stocks they were telling me about were doing really well—probably better than the ones I was investing in myself.”

Combining the wisdom of his middle-school roster with his own research and knowledge, Baker started to invest real money in real stocks. And lots of it. Along the way, he not only exploited undervalued companies, but also noticed that key economic drivers were faltering, and the U.S. economy would soon fall victim to one of the worst recessions in the country’s history.

“There was severe stagflation everywhere, and a recession was clearly on the way” Baker says. “But no one seemed to notice.”

To get the word out and forewarn anybody who would listen, Baker began writing weekly blog posts on the Shock Exchange’s website. The posts contained stock tips, observations on the economy and also policy ideas to counteract negative growth. By the time Paul Krugman and other notable economists caught on, though, it was too late to remedy the situation. The housing bubble had already burst, Fannie Mae and Freddie Mac had already defaulted on their securities and loans, and the only option left, as Baker says, was to “strap up and endure the pain ahead.”

In short, Shock Exchange attempts to explain the complex causes of the ’08 financial crises in layman’s terms, while seamlessly interweaving anecdotes and experiences from Baker’s travel basketball team.

SLAMonline recently caught up with Baker to discuss the concept of the book, the storyline and lessons within, his motivation for writing it and more.

SLAM: In a nutshell, what is Shock Exchange about?

Ralph Baker: I think the book can be broken down into three different sections.

1) My background — About my family and how I grew up, and what makes me qualified to talk about this stuff.

2) The team — How the New York Shock Exchange was formed, and how we kept it together despite the AAU game changing from a family-friendly environment to a booster-dominated, the-ends-justify-the-means organization. I detail the cutthroat New York City AAU scene that I wasn’t prepared for. Because in Connecticut, where I first started coaching, youth basketball was very laid back and went by the book. But when the NBA began expanding and college coaches started doing most of their recruiting in AAU, the game sort of became a bidding war for these kids. You’d have strangers befriending the kids and trying to take them from our team, and I just wasn’t prepared for that. So, the stories from the Shock Exchange are real interesting and intriguing.

3) How the kids predicted the great recession, and how we were talking about this stuff before anybody cared — How I was noticing trends that people either didn’t realize or neglected for a few years. I wrote a post back in April ‘08, about how the economy was heading toward a severe recession, and even included some steps we could take to turn it around. I said we needed to invest in infrastructure, figure out a way to reduce the cost of college, and I spoke on healthcare reform and so on and so fort. But it wasn’t until August ’08, when Fannie Mae and Freddie Mac failed, that [then-Presidential candidates] John McCain and Barack Obama and the rest of the country finally began to take notice.

Also, towards the end, I discuss “the pain ahead.” As in, the steps taken during the Bush and Obama administrations, and how their respective policies affected the economy. So, at the end of the day, it’s a cool way to learn about the economy as well.

SLAM: Besides Apple, what are some other stocks the kids brought to your attention?

RB: Well, Apple was the biggest one, because we rode that for a long time. Another big one was GameStop. It’s funny because the kids were onto GameStop before everyone else, and then they were the first to realize GameStop was going to fall apart because people were shifting to buying and playing games online. The kids would tell us about every stock they thought would do well, and we usually narrowed it down to two or three of their best stocks.

SLAM: But it had to be a little more complicated and thorough than just taking the kids on their word, right?

RB: Yeah, of course. We would first have detailed conversations with the kids and try to pick their brains, and then the team would take trips to stores to examine and experiment with the products in person. We’d take a look at the products, but we’d also talk to employees. And it was crazy, because almost always it was clear the kids realized and recognized trends before adults did.

SLAM: Did your players understand all the economic jargon, such as GDP to debt ratio, unemployment rate, marginal propensity to consume, etc.?

RB: Yeah, we explained all of it to them.

SLAM: Wasn’t it hard to simplify those terms into a way the kids could understand it, though?

RB: At first it definitely was. But we just took it slow, and put in a lot of time with the kids. We explained it, like, ‘This is what’s going on with auto and housing sales, and this why it’s important.’ Obviously, we used a lot of theoretical and real-world examples, and not a lot of mathematical ones, because that would’ve been too much for the kids to grasp. Naturally, some kids were interested and got it, and others were like ‘Why are we learning this’ and were either bored or disinterested.

SLAM: What would you say is the tone/mood/voice of the book? Is it more of an I told you so story, or a What to do now story, or The future is about to be even harsher story, or what?

RB: The tone of the book, I guess, is simply teaching economics through the eyes of the kids. Not in an authoritative tone, but in an informative one. Like the title says, it’s how inner city kids from Brooklyn predicted the great recession and the pain ahead. It’s more of a story, and a journey of how I came to learn economics and teach the kids, and how we began to see what was ahead.

SLAM: Who’s your target audience?

RB: It’s written for anybody who wants to be informed, really, but I do think it reaches a few specific groups. African Americans will probably be interested because it goes into African American history. Basketball people will be interested because of the actual stories about the kids, and I also make references to the NBA and the NCAA, examining how supply and demand trickles down through college and the League. I think SLAM readers would love it. I break down complex terms in way that someone with no background in economics can comprehend and follow along.

SLAM: Why did you decide to write this book now? What makes it relevant at this moment?

RB: In 2009, when the stock market came down, I decided I was going to write the book. So I went back and looked at deals I did in ’93 and ’94. and tried to do extensive research. I procrastinated for a bit, but from February ’11 until March of ’12, I was up till like four in the morning every night just putting in work, doing research and typing away.

SLAM: Is the book solely a work of historical non-fiction? Or are there some main characters, protagonists, and subplots woven into the story?

RB: I go real in depth on several of my anecdotes, and use real scenarios, so there is definitely a sense of a storyline in there. I changed the names of the kids, but everything in the book is from real life. For example, I tell the story of how our AAU team was on the cusp of a national title until it started to get picked apart.

SLAM: How did the cover art come about? It’s a pretty eye-catching image.

RB: That’s the logo for my website. I wanted a symbol for what the NY Shock Exchange stood for, which is youth basketball and economics. So I took my son, who is 17 now, and had him spin a ball on his finger while wearing a suit and gripping a briefcase. I think it captures the essence of it all.

Shock Exchange: How Inner-City Kids from Brooklyn Predicted The Great Recession And The Pain Ahead is available now, both digitally and in print. You can order a copy here.

  • Add a Comment
  • Share
  • RSS

Tags: , , , , ,

  • http://slamonline.com/ Ben Osborne

    Nice work, Eldon and Ralph.

  • LakeShow

    LOL

  • shockexchange

    Eldon, Thanks for a thoughtful, well-written piece. Great job … looking forward to future articles from you on here. Thanks again to SLAM, I could not afford to pay for this type of publicity.

  • http://twitter.com/AjpDos Allen Powell

    This is crazy. Where is NBK, he needs to be apologizing. And where is my free copy?

  • http://twitter.com/sooperfadeaway nbk

    apologize for what Allen? The Shock Exchange that comments is Ralph’s son. And he talks reckless as hell. That book has nothing to do with basketball or anything he has been boasting about. I was gonna comment that it is too bad that the person who represents “The Shock Exchange” on this website is only tuning people out of taking this seriously. The book is obviously a great thing, the idea seems almost genius, but the person who has been commenting on this website is not the same person that wrote that book and came up with the whole brand.

  • shockexchange

    (A.I. voice) “Free .. What you talkin’ bout free?” Besides, the Shock Exchange gave you, the Baconator, Ciolkstar, Jukai and STATUS some shine in the book. I should have printed copies in a few days. I would be happy to meet up with you in the City and we can negotiate something.

  • shockexchange

    Read the book and then decide. SHOCK EXCHANGE goes in depth about how having “too much mouth” got me in a lot of trouble growing up. Besides, where I’m from, it’s not “reckless” if you can back it up.

  • http://twitter.com/sooperfadeaway nbk

    The Shock Exchange made up a saying just for this occasion: “Heavy is the head that wears the crown.”
    .
    You made that saying up?
    .
    In Shakespeare’s Henry IV, Part 2, Act 3, Scene 1, the king has a soliloquy. It begins, “How many thousand of my poorest subjects / Are at this hour asleep! O sleep, O gentle sleep, . . .” At the end, he declares, “Uneasy lies the head that wears a crown.”

    .
    Already found you talking reckless. That was quick.

  • shockexchange

    The Shock Exchange made up a saying for occasions like this: “There’s only one thing worse than being talked about … and that’s ‘not’ being talked about.”

  • http://twitter.com/sooperfadeaway nbk

    to clarify, that saying is widely misquoted and spun around to say “Heavy is the head that wears the crown” – just like the other sayings SE has butchered in his short time here.

  • http://twitter.com/sooperfadeaway nbk

    and that saying was made up by Oscar Wilde…..reckless.

  • shockexchange

    Trust me, compared to SHOCK EXCHANGE How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead, the things I have said on SLAM are what Webster would define as “tame.”

  • Ugh

    Nobody saw the recession coming? Do we read the same papers?
    Actually, probably not.

  • MrSuper

    Seems quite good, but dude, this book needs a better cover.

  • shockexchange

    You’re in the minority on this one. Everybody loves the cover art. It’s subliminal. If you examine it closely, you can tell what the book is about before reading it. When I started the Shock Exchange in ’06 as a vehicle to teach kids financial literacy, people thought I was crazy. After the crisis, President Bush / Obama, Warren Buffet, Goldman Sachs, ESPN’s 30 for 30, et al. have all touted the need for financial literacy. Some have even quoted the Shock Exchange verbatim, but conveniently forgot to cite the original source.

  • shockexchange

    Actually, the Shock Exchange doesn’t get its news from the mainstream media. And before Fannie and Freddied failed, and then Lehman, the newspapers were not talking about the pending recession. In fact, nobody cared about economics in general. The Street was enamored with math and engineering majors who could devise complex formulas to help price credit default swaps and predict default rates on housing. After the crisis, you can now open the Wall Street Journal and read about economic trends in the U.S., China, Russia and Bangladesh.

    Lastly, nobody’s talking about “the pain ahead” either.

  • shutup

    Thank You.

  • http://twitter.com/sooperfadeaway nbk

    i just can’t believe he got so many people to believe he’s the person who wrote this book. and he’s still talking like it was him. smh

  • LakeShow

    lol. This kid is a piece of work…

  • MrSuper

    I have two BAs. One in business economics and finance, the other in graphic design. My training in economics helps me see what you are trying to do with the subject matter of the book and I salute you for that. As a graphic artist I must tell you that the cover needs a little bit of more work.
    Financial literacy is an issue for most of the developed world. Too bad that all of the western economies turn their backs to it.
    The crisis and its implications on the development of the EU was my thesis back in 2000. Most of Keynesian economists had predicted all this mess, but were not specific on a date.

  • MrSuper

    ^ Not this crisis ofcourse, but the possibility of one.

  • shockexchange

    The picture is a sample of the cover art. The actual cover art for the book is in a higher resolution format. The picture of a kid spinning a basketball and holding a briefcase tells the whole story. With the dark, grainy, Brooklyn streets as a backdrop, you can’t tell what year the picture was taken in … it could remind one of the days when John Pierpont Morgan walked the Brooklyn streets or of the picture of Grandma and Grandpa in the family room, keeping a eye on the current goings on.
    That said, the Shock Exchange has gotten several compliments from readers on the book cover.

  • shockexchange

    I’m going to tell my son how popular he is on this site, in absentia. Everything the Shock Exchange has said on this site (and some) is explained in the book, and supported with details. I wrote the book partly to make people think. Don’t just blindly co-sign the Shock Exchange (like you usually do), tell me what you agree with and what you take issue with.

  • LakeShow

    Popular:

    Liked, admired, or enjoyed by many people or by a particular person or group….
    Try again…

  • LakeShow

    “you can’t tell what year the picture was taken in … it could remind one of the days when John Pierpont Morgan walked the Brooklyn streets or of the picture of Grandma and Grandpa in the family room”
    .
    .
    .
    Sans the 2002 Hyundai on the left lol. Just playin mang.

  • MrSuper

    I think the cars on the left of the kid give a pretty big clue as to when the picture was taken. The typeface is of a solid choice but the title is too big, too streched out. Why chose black as the main color? Is the book concerned with casualties of war? Were the readers who complimented the book’s cover associated with the graphic arts?
    I’m not trying to be negative nor antagonistic here. I’m just calling ‘em like I see ‘em.
    All in all I want an effort such as this to reach out to the public. From a pure visual point my opinion is that you come up a little off.

  • http://twitter.com/sooperfadeaway nbk

    the LeBron rules are in there? and how LeBron learned from them? HAHA, i hope everything he has said doesn’t show up in that book.

  • http://twitter.com/sooperfadeaway nbk

    your son told people they get a free copy of the book. that’s what Allen is talking about.

  • LakeShow

    I for one will never know what that book says…

  • shockexchange

    Funny you should say that nbk. Actually, the LeBron Rules are in the book. After I wrote “the rules,” the next day the Shock Exchange website went haywire. I used it as an example of how enamored the public is with all things LeBron. I never realized until then.

  • shockexchange

    Don’t start sucking up to the Shock Exchange now you know he’s an author. The Shock Exchange sees through you Lake Show.

  • LakeShow

    LOL.
    You are DUMB man.

  • shockexchange

    I told AllenP he could get an “autographed copy” of the book. Picking your own facts again nbk?

  • http://twitter.com/sooperfadeaway nbk

    ok the rules are in there, is how LeBron learned from them in there? Because according to your son, the Shock Exchange should get the credit for him evolving….you know, since ” Everything the Shock Exchange has said on this site (and some) is explained in the book,” – simply put, your son is reckless. I honestly have no respect for your book because of the blatant BS the kid posts on here daily. Which sucks, because after i read about it on your website i thought it was a great idea and initiative. But if it’s connected to the person who uses the Shock Exchange handle on SLAM i will never endorse or read it.

  • http://twitter.com/sooperfadeaway nbk

    shockexchange • a month ago • parent

    Since reading the “Lebron Rules,” James has improved his midrange game and cut down on his 3 point attempts. He is now far and away the best player in the L … just the facts

  • shockexchange

    The Shock Exchange has a saying for occasions like these: “Thou doth protest too much.”

  • http://twitter.com/sooperfadeaway nbk

    “A liar is always lavish of oaths.”
    ― Pierre Corneille
    “If you tell the truth, you don’t have to remember anything.”
    ― Mark Twain

    “A man is never more truthful than when he acknowledges himself a liar.”
    – Mark Twain

    .
    Or my own personal favorite,
    “A liar will always lie about lying”

  • LakeShow

    Precisely.

  • http://twitter.com/sooperfadeaway nbk

    neither will i. and he’s lucky i can’t find the page where his son told people they get free copies of the book. since everything that’s been said on this website is a fact and all.

  • shockexchange

    The Shock Exchange has a saying for an occasions like these: “He who has a thousand friends has not a friend to spare, And he who has one enemy will meet him everywhere.”

  • http://twitter.com/sooperfadeaway nbk

    naw, you told multiple people they get a free copy. if i find it, i’ll show you.

  • shockexchange

    For the avoidance of doubt, the SLAM post where the Shock Exchange promised a select group “an autographed copy” of the book was June 20, 2012: “Miami Heat One Victory Away from Winning the NBA Championship”

  • http://twitter.com/sooperfadeaway nbk

    COINCIDENCE!!!! The very same Ali ibn-Abi-Talib whose saying you are using, made some sayings about you,

    - “The innumerable fools have made the learned very scarce.”
    - “To fulfill promises is the highest form of integrity”
    - “Friendship is impossible with a liar.”
    - “Humility is one of the nets spread by real greatness”
    .
    Oh and he made one about your book, “Lying spoils news.”

    .
    See, you aren’t talking to one of your kids, or some idiot who is just going to think you are smart. Copying and pasting sayings doesn’t mean you know what your talking about. The lies and bullsh*t your son posts on this site are bad enough.

  • http://twitter.com/sooperfadeaway nbk

    yes it was on that page YOU ARE RIGHT
    .
    “As an “olive branch” was going to give you an autographed copy of my new book coming out in July, but I’ve just struck you off my list Allenp. See what you accomplished?”

    .
    Need me to spell out how you said it’s free? since you are obviously bad at reading (and you wrote a f*cking book, good lawd)
    .
    ” going to give you an autographed copy of my new book coming out in July”
    .
    Give: To Freely transfer the possession of (something) to (someone); hand over to: “they gave her water”.
    .
    As I said. You aren’t talking to some child you can manipulate.

  • shockexchange

    I will give an autographed copy of my book … in exchange for the cost of the book. Nowhere did I mention the word “free.”

  • shockexchange

    And after more back talk, the Shock Exchange stands corrected. You don’t protest too much.

  • http://twitter.com/sooperfadeaway nbk

    well if you are stupid you didn’t. Or if you don’t understand the english language…..did you write your book in English? I hope not

  • LakeShow

    I remember that quite well, when he said that. He wanted us to stay on his good side so we would get free copies of his book is what I recall. Need-less to say we went in on the dork so we should not expect freebies lol…

  • http://twitter.com/sooperfadeaway nbk

    as i said then, if he “gives” (which apparently means “sells”) me a copy of the book, i will use it as firewood. or kindling i should say.

  • TheWhiteMarkPrice

    Damn, I haven’t been on in a few weeks and I come back to read this “shock exchange” Nonsense.

  • charliewinning

    Saw the poster for this book a couple weeks ago in the barbershop window on Hanson Place, up the block from the mall. Gonna check it out.

  • shockexchange

    That’s a good look. Enjoy.

  • danpowers

    you should claim your enrollment fees from that graphic design studies back. most courts should decide in your favor, just use this discussion as evidence.

  • shockexchange

    The cover art is consistent with “the pain ahead.” Remember you heard it here first.

  • Lorne

    Hater, why does he get to you so much?

  • Lorne

    Go find some friends.

  • http://twitter.com/sooperfadeaway nbk

    I didn’t say anything that wasn’t t true, and I certainly didn’t say that for no reason, obviously I was responding

  • MrSuper

    No I shouldn’t. I back up my arguments with fact, and I did so here as well. Your derogatory comment is not appreciated. I did not insult the OP. I just pointed out something in my area of expertise that might have been of help to him, while being civil about it. I do not see the reason why you are so miffed about it, unless you had some contribution to the creation of the book’s cover. If indeed it is so, then my fellow you shouldn’t react so harshly to creative criticism; if it is not so, then I suggest you should apologise to the person that happened to finish his course among the top 5% of his class (that would be me).
    And nobody has to deal with this kind of trolling, smh

  • danpowers

    lets not get sensitive here, that was just my way to say “i like the cover”

  • shockexchange

    Dan the man!

  • shockexchange

    If anyone is interested in printed versions of SHOCK EXCHANGE, get at me. Send me your email address and we can make it happen.

  • MrSuper

    ok, my bad for getting a bit agitated about it

  • danpowers

    lol, thx

  • shockexchange

    If you want a signed copy of the book, get at me. I go to the barbershop where the poster is located.

  • Ugh

    Wow, I totally forgot about this thread.

    If you don’t get news from the “mainstream media” then you can’t be commenting on the accuracy of it.

    If I read mainstream media (which I did) that predicted the economic collapse as far back as 2005 (which it did), then your “nobody” line must be… uh… the non-mainstream media. Which is what you read.

    So it kind of looks like you think you predicted that when nobody else did because you don’t pay attention to quality news sources that were predicting it.

  • shockexchange

    You’re arguing in a vacuum. You don’t know what news sources the Shock Exchange used. Hey, never let the facts get in the way of your argument. You’re the best.

Advertisement