PBS-TV"WealthTrack" February 16, 2007
John P. Calamos, Sr. Discusses Long-Term Wealth Creation and the Opportunity of Convertible Bonds.
On the PBS investment television show, "WealthTrack," John P. Calamos, Sr., chairman, chief executive officer and co-chief investment officer of Calamos Investments, discussed the market and his perspective on building wealth, as well as the long-term potential of convertible securities. Calamos shared his views with host Consuelo Mack; joining Ms. Mack and John Calamos on the show were well-known investment industry experts Charles Ellis (founder, Greenwich Associates) and George Roche (former chairman and CEO of T. Rowe Price), who agreed with Calamos that quality growth stocks are being undervalued.
Calamos said that although current valuations are fair across most of the market, he believes there are still areas that have not yet participated to their full extent—most notably domestic and international growth stocks. He stressed the importance of a long-term approach, and cautioned against investors "chasing" performance. His prescription for chasing is taking a strong look at valuations, "Most investors want to beat the market when it's going up, but when it's going down, they don't want to [track the indexes]. They want to preserve their capital."
Since convertible bonds combine the cushion of fixed-income securities with the upside potential of equities, they may be a particularly valuable addition for long-term investors. "Managing risk has really become a cornerstone of how you create wealth," Calamos explained. Calamos also said he thought convertibles should be part of any well-managed, defensive equity strategy.
According to Calamos, convertible bonds may be especially attractive as core holdings for the conservative investor, especially when blended with other asset classes. He also views convertibles as becoming a bigger and bigger asset class in the global market, despite the fact they haven't grown much domestically. In Calamos' view, "Convertibles are all about accessing capital—and we know there's a lot of growth out there—so convertibles become the means by which companies can grow."
Calamos concluded by saying, "Everyone worries about the bookends—the bottom of the market and the top of the market," and that convertible bonds are a suitable investment in this nervous-type of market. He also added that "investors need to think global" and that they should be fully invested throughout the market cycle.
For more information on John P. Calamos' views on convertible bonds and long-term investment opportunities, please visit our commentary section.