New York.- By Irene Zoupaniotis
John P. Calamos, Sr., Chairman and Chief Executive Officer of Calamos Investments, was the guest speaker at an event sponsored by the American Hellenic Institute and the Greek American Chamber of Commerce, that took place at the Four Seasons Hotel in Philadelphia. John Calamos was introduced by Drexel University President Constantine Papadakis, who pointed out the fact that Calamos is on the Board of Directors of the Benedictine University (a university West of Chicago with 4,000 students).
“This shows John Calamos strong commitment to education. Last May he delivered a commencement speech at the Benedictine University, and that speech is more instructive than a mere biography of John Calamos. It speaks of the humble background and surroundings that Mr. Calamos had as a child, coming from a family with no college education. He was very intent on getting an education and his family was very supportive, which is a distinguishing characteristic of immigrant families. He also spoke of risks one encounters in life, investments and all aspects of existence—one should not be a mere spectator, but a player.”
In his speech John Calamos Sr. described his involvement with the business community. When he was out of College, he saw an ad for pilots and decided to join the air force. He spent five years in active duty, and ten years on the reserve. Before that he had received his master degree in Finance and during his off-time he studied finance. When he first started investing, he found a box in his basement with old certificates of stocks and he decided to further investigate them. He became further intrigued by the stock market and his mother gave him $5,000, with which he bought those 5 tocks and set up a portfolio.
During this time Calamos also was very interested in convertible bonds. Typically, people buy bonds when the market is bad and stocks when the market is good. However, convertible bonds have one distinguishing feature anytime one, as the owner of the bond, wants one can convert that bond for a specific number of shares into the underlying common stock. Therefore, there is the upside of the stock market but the downside safety of the bond.
Calamos got into the market in 1970, during a time where the Dow Jones (as it was through out the ʽ60s) was at 1,000. The market was very good, however, by 1974 the Dow Jones was at 500 (a 50% correction). Interest rates were at 18%, his mortgage was at 10%, and earnings were very poor for companies. During this time period Calamos used convertible bonds extensively, and did very well for his clients. However, because many people did not know very much about convertible bonds and it was still very much in its theoretical stage, trying to be a broker at a company was very limiting when they only wanted him to sell whatever was coming down the pipe. Therefore, in 1977 he decided to set up his own broker dealer and continue to do convertibles.
In 1980 Calamos decided he wanted to be an investment advisor instead of a money manager. He then wrote to three companies he had seen an article on to see if they were looking for new managers, and explained to them who his company was and what their unique expertise was. Delta became his first client in 1980, and is still a client today.
Calamos goes on further to describe the company, and how he describes it as a family business. His brother who had worked in factories and had been laid off was given a job by Calamos at the company when he had caught his bookkeeper stealing money. He sees family as the best and most trustworthy choice in a company. His brother continued to work for him until his retirement a few years ago. After his brotherʼs retirement, his nephew Nick who had just come out of college entered into the company and now does all the analytical work, computerizing their research system. Over the years, Calamosʼ company became the largest convertible mi-manager in the world, managing over 40 billion dollars in international convertibles and domestic convertibles.
Calamos then goes on to address the audience with a few key tips. He states that he believes it is possible to earn in a conservative fashion 12-15% annualized return over the long-term. This means that one can double his money every 3 ½ years. Also, he states that it is not about reading the indexes but creating wealth. Being in the market for a short-term basis does not work and one should not do this for serious money. One needs a long-term plan to execute and when setting up the long-term portfolio there must be a long-term trend. Today, people are looking for companies that are participating in long-term trends: Google, Apple, etc…
Calamos also states that globalization is not a threat, and it is one of the huge forces people to not appreciate the gravity and benefit of it. He suggests that globalization is a force that puts checks on governments—if a government makes a mistake it will be punished by no more trading, money will move out of the country, etc… The phenomenon of globalization is one that he sees as one of the factors to why the U.S. is also experiencing a weak dollar. This is because countries all over the world are allowing citizens to invest outside their own country. Globalization is also a significant trend that he believes will propel the world to higher standards of living.
Calamos concluded his speech with a quick market overview. He stated that the volatility will not subside in the market, however volatility does not necessarily have to be a negative thing because with volatility comes opportunity. He cited that the most volatile sector of the market, technology, is also the most lucrative and they are which people find the most opportunity. His view is that maybe the worst is over as far as the economy goes. However, he views that there are several actions by the government that may be negative to the market. For example, he states that every time the Fed takes an action there is a long drop in the rates and that the Fed does not do a good job in manipulating the economy. However, he views that outside the automotive and housing market, our economy is still strong. Putting regulations causes more problems and the election is not helping because it feeds into fear. The market today is all about fear and when people have fear they will not do anything and will just tighten up.
He is pretty constructive on the market, but he still sees many problems going forward. On a brighter note, he ends his speech stating that he feels the work is over and that the market has been behaving itself a bit more.
During the question-and-answer portion of the evening, he first addressed the increase in commodity prices. He states that typically commodity prices are cyclical and that a reversal is coming. He also states that there is a linkage of the weak dollar to commodity prices and the demand side from emerging markets.
Calamos then went on to address his view of free-market and how although he is supportive of a free-market, the only way for that to work is by having a level-playing field, which the U.S. does not have. He cites hedge funds as capable of doing all kinds of things within regulation and how it is the hedge funds who need to be more heavily regulated. Lastly, he states how two things kill the economy, Congress and the Fed. He says how they worry about it, especially because the solution is to raise taxes even though he suggests if they lower capital gains tax the government will get a higher revenue.
AHIʼs Executive Director Nick Laringakis in his closing remarks praised John Calamos Sr. for his accomplishments as a role model for the Greek American Community. Nick Larigakis. He then spoke of a feature on the American Hellenic Instituteʼs website where Greek-Americans can network and an employer lists a job opening and conversely those looking for work also post on this forum. Therefore, it increases Greek-American network.
The American Hellenic Institute has an agenda invested in the future of Hellenism in America and of a strong relationship with Greece and Cyprus on the behalf of U.S. interest.
Calamos Investments is a diversified investment firm offering equity, fixed-income, convertible and alternative investment strategies, among others. With roots dating back to 1977, the firm serves institutions and individuals via separately managed accounts and a family of open-end and closed-end funds, providing a risk-managed approach to capital appreciation and income-producing strategies.
The firm serves institutions and individuals via separately managed accounts and open-end and closed-end funds, offering a risk-managed approach to capital appreciation and income-producing strategies. The company has retained its character as a boutique investment firm – one that originally specialized in convertible investments – while diversifying into new investment portfolios, such as global equities. The companyʼs Class A shares trade on the NASDAQ Global Select Market.