The Hindu Business Line : Investment Nuggets

Vietnam war veteran and self-made money manager, John Calamos, has an estimated current net worth of around $3 billion. After founding Calamos Asset Management in 1977, he made steady progress in Wall Street armed with exceptional knowledge in convertible securities. Calamos, known for his smart investing strategies, won BusinessWeek’s best manager for 2003 and 2004. His company now oversees over $44 billion in assets. Here are a few memorable quotes of the man who loves flying as much as he does investing:

“There’s no better way to study a subject than to study its history. I had become intrigued with convertible bonds and their complexities and, if understood well, the ability to use convertible bonds to help manage the risk of a portfolio. It seemed to me that their unique characteristics could be developed into an effective investment strategy. My goal was to know as much as possible about convertibles bonds. This dedication to expertise is an important aspect of why we became successful.”

“I spent five years on active duty in the Air Force with a tour as a combat pilot in Vietnam and 10 years flying fighters in the Air Force Reserve. It was risky, it was challenging and it was fun. I enjoyed being a pilot and flying. I still do. Now, when you are a military pilot flying airplanes, you cannot avoid risk. But I learnt that with preparation, I could manage risk. I also learnt in life and death situations that you never, never, never give up. You persevere no matter how dire the circumstances. You are in control of your destiny. Take that control and persevere.”

— On risk management

“The management of mutual funds is quite different from closed-end funds. Open-end mutual funds have a wide range of objectives – from growth to defensive equity and absolute return. With a mutual fund, you are managing to increase value, but the payout is at the end of the year. Closed-end funds offer either enhanced fixed income or total return, but are designed for income distribution. With closed-end funds, the market determines fund prices; but as a manager, you are managing for level and increasing distribution of income.”

“The key to building wealth lies in controlling risk — a favourable risk/reward profile is critical to superior performance. Successful investors manage risk while pursuing returns, recognising the importance of both to the investment equation. Explore the use of convertible bonds as a unique risk-control measure. Their bond features help cushion the impact of stock market declines, while their potential participation in rising stock prices has no ceiling,” — Number one investing rule.