The following interview is part one of a two part series. Please click here for Part two
For thousands of investors who profited in years past from the meteoric rise of commodities, mining, and small- to mid-sized life science and technology companies, Thom Calandra acted as a beacon. In the later years of the last decade and for several years at the start of this one, Calandra helped his followers find value in the plethora of investment choices before them. A longtime print and wire journalist, he co-founded MarketWatch.com some 12 years ago. He was the website’s editor-in-chief, an award-winning columnist, a television commentator on the CBS network and a broadcaster for MarketWatch in San Francisco and London. Under Calandra’s stewardship, MarketWatch's news team rose to almost 100 journalists. The company later became CBS MarketWatch, was sold in 2005 to Dow Jones & Co. for more than $500 million, and will soon become a News Corp. property. Calandra resigned in 2004 after failing to disclose in proper and legal fashion the buying and selling of stocks he was recommending in his investment newsletter, The Calandra Report. Thom settled his case with the U.S. Securities & Exchange Commission one year later. He is currently at work in California on a novel, "Pablo By Numbers" and also operates the site ThomCalandra.com.
Over the next few weeks Stockhouse.com will feature a series of excerpts from Calandra’s book. In an interview with Stockhouse Executive Editor Darin Diehl, Thom Calandra talks about his novel, his run in with the SEC and the high speed, adrenaline pumping days of the small cap stock market “melt up.”
Copyright © 2007, Thom Calandra
ALL RIGHTS RESERVED BY AUTHOR
Darin Diehl: Hi Thom. Thanks for taking the time to speak with us. So what have you been doing since leaving MarketWatch and settling your case with the SEC?
Thom Calandra: Hi Darin. Good to talk to you. Well, it’s been almost four years and I've been doing a lot of personal writing. And of course there is the novel, "Pablo By Numbers," which is absorbing my energy for a third year now and is almost complete. I also keep up a small site with some essays and scripted thoughts at www.ThomCalandra.com. And I have been helping a few longtime friends here in California, mostly advising and writing, no big shakes. I am an investor in Vator.TV, a social networking site for angel investors and start-ups. I also am studying French to keep up with the kids and ma femme (my wife).
Darin: Thom, back then when you were writing the newsletter and the Thom Calandra's StockWatch column, and doing the TV thing and all that, you seemed like you were having a ball. And you did build up a loyal following of investors who were keen to follow your advice. Do you miss those days? Have you had much contact with the readers and television viewers who followed your advice for so long?
Thom: Do I miss those days? Well, I have learned to accept what is - what is in my life, thanks to some choice reading and some sitting on the grass watching the ships in the bay come through the Golden Gate. And yes, I have something to say to that audience. I miss them that audience. I miss the ordinary folks who shared the jetstream with me. We all had a boffo ride as the market melted up in price, and I am proud of my work from that time. I think that much of it -- the commodities boom, the pioneering work in genomic tools, the next-generation web companies -- I think it holds up: the analysis, the interviews, the choices of companies that made sense in a risk-oriented portfolio three or four or five years ago. I think many of those companies I discussed and examined and met with I think they hold up today. Not that I was always right, Darin. I wasn't.
Darin: For your readers back then, some would have done well by your advice, others perhaps not? Do you hear from them at all?
Thom: Yes I do, and I have to tell you, most of them -- except one fellow from Perth, Australia -- most of them have nice things to say when I meet them or get notes or calls from them. You have to remember: those were great days. Gold was just starting to bust out. Small and mid-sized companies were raising capital and attracting investors with new ideas. Life science companies were taking a crack at the human genome. My audience of readers and viewers enjoyed the access they received from the executives and the fund managers and the financiers. I think - I like to think - that maybe they enjoyed my initiative. The notion that small companies, even companies with puny market capitalizations, would find creative ways to raise money and create or re-create themselves as established presences in the stock market, well, this is something we discussed frequently in The Calandra Report and in Thom Calandra's StockWatch. It is happening today. We now have special purpose acquisition corporations that engineer reverse-transfer mergers into shells so they can circumvent the costs of a traditional IPO. The venture capitalists love these things these SPACs as they are called, because they get a chance to cash out of their initial investments. The investors ordinary folks in garages they get to consider something new and fairly priced -- often severely under priced -- for their portfolios.
Darin: You seem to take great pride in the work you did. Yet there was a dark side to all of this, correct?
Thom: Well, yes. Dark in the sense that the market, my popularity and the fact I could get my calls to just about anyone returned, it all... it all consumed me. Papa, my father-in-law, came by one Sunday evening and caught me out of the corner of his eye checking the prices on the screen, the laptop. He raised one of his eyebrows and looked at the kids playing "Trouble" in the corner of the room, and all I could say to him was, "Yeah I know, but Papa, Hong Kong just opened for the morning." The newsletter and my work at MarketWatch and my audience, they were tapeworms inside me. I loved it more than anything, even riding my mountain bike, which no one ever thought they would see the day I let the bike gather dust. I especially went bonkers in love over the writing process, the craft. I mean, I'd always loved writing, as a journalist for about a dozen newspapers and for Bloomberg in London and in creating the MarketWatch newsroom, and for myself, too: poetry, short stories. I was darn tootin' proud of my analysis of companies and markets and new products and stock market strategies. I was mad, simply madly in love, with locating value before it became valuable -- kicking the tires so to speak -- at dusty old stinking gold mines and at one-room start-ups. I remember when Akamai (NASDAQ: AKAM) was a one-room start-up in San Mateo, California, just a floor above where we were doing our early work on MarketWatch. Nothing made me feel better than scoping out a company with a market capitalization of zilch, or next-to-zilch, and meeting the executives and visiting the properties and calling the customers and doing the math and making the call, and telling the story to my audience in a narrative that people could print off their computers and take home and peruse and enjoy. Well, nothing except a huge plate of pasta and baby peas, with little specks of ham and red paper flakes.
Darin: What was happening to you during this time? How did this all affect you?
Thom: When I became the subject of the inquiry that changed my life and when I got the letter in the mail, hearing from the SEC was the best thing that ever could have happened to me at that point in my professional life. The enforcement folks in the San Francisco office, I consider them my guardian angels in a way. Even if they did kick the fiscal beans out of me. I mean nothing could go wrong right? I was making thousands of folks money, I was traveling more than ever, speaking, writing, dining in all sorts of exotic places: Dubai and Hong Kong and Beijing and so on, and some gnarly spots too -- Ghana, for instance, or the south shore of Long Island. I wanted acupuncture, I got acupuncture. I wanted hairy Shanghai crab for lunch, I got crab for lunch. And unfortunately, I was beginning to believe my own beeswax. I was a one-person road show. And because I was one of the key people at MarketWatch, their headline commentator and founding editor, the guy who dyed his hair gold and jumped up and down in front of the cameras and wrote his keyboard plastic letter buttons down to their metal pins each and every day, and because the company was thrilled to be entering yet another seemingly profitable frontier -- Internet-delivered subscriber newsletters that people paid money for -- well, I guess there was no one there who dared to knock me off my high horse.
Darin: So you were literally left to your own devices?
Thom: I was left to romp, and the company, most of the folks at the company -- my fellow journalists and the executives and the technicians and the TV people included -- they thought it was compelling that I was willing to put my own money where my words were: in effect, to be a walking and talking hedge fund. Well Darin, pity the person who is so wrapped up in his or her own version of themselves that they don't have time for their kids, their friends, their families, their fans at some point and their own craft. They are so self-enraptured, so self deluding, that they don't even know who Brad Pitt is, or Angelina Jolie, they can't even remember the names of the 20 or 30 15-star hotels that warp-drived through their spritzed hair-do in a laser vision blur. But hey, they can quote you chapter, verse and ticker on the names and faces and stories behind a hundred, two hundred, five hundred companies. Whoo! So I went too far, I went too fast, and at some point I became a kind of self-fulfilling prophecy.
Darin: Do you feel like you let down your audience? That somehow, you lost your way and you want to make it up to them somehow?
Thom: Look, I settled with the Securities & Exchange Commission, and in signing the consent decree three years ago, besides the money element of it all -- and this is all public record -- in signing the decree, I neither admitted nor denied guilt in the matter of my trading. But the fact remains that I went too far, too fast. To this day, I am looking into my brain, my soul, trying to divine just why I felt for this short and intense period of time, why I felt I could hit the "buy" and "sell" buttons whenever I wanted to without being as forthright as I could have been in clear and simple writing with the folks who supported my work. That is my audience, who I loved and still love. The newsletter business is as intoxicating as it is punishing. You know I have never been into either getting drunk or whipping myself. But in the spotlight, on the stage, 40,000 feet above the planet in the leather-plush womb of a Gulfstream streaking across the sky, I guess I felt I was safe and loved... and untouchable. In fact, there was one thing I undeniably was: I was wrong.
Darin: So what did you learn personally from that whole experience?
Thom: I'm still very good at chapter and verse, only this time around I quote a little of The Bible, a little of the Bhagavad-gita and a lot of the Securities & Exchange Act of 1934. I learned that the SEC enforcement folks are young and extremely hard working and smart... and way underpaid. Their offices are dingy, too. No mahogany wood tables and sparkling water in the conference rooms. Some of them have decent hairdos, though. I learned that everyone is my friend, every person on the planet, but that during this period, some human beings were extraordinarily generous and friendly and understanding... and others were not. That's OK. I learned that a good priest, a loving family, the best lawyer you can afford -- and I darn-tootin’ had her thank goodness -- and a mountain bike are all necessary to survive legal and other crises. A lap pool and a bathtub Jacuzzi definitely help, too. I learned that I am not a pretty sight at 128 pounds. I learned some French. I learned how to cry. I learned, after a year that I now call "My Favorite Year," a truly gosh-awful 12 or so months of being about as withdrawn and skinny and lost as a human being, scratch that, as lost and withdrawn as a transplanted New Yorker could possibly be, I learned that northern California may be cold and it may be damp, as the song goes, but it works for me and for my family... and it has worked well for us for many, many years, going back to the 1980s. Even longer for my wife, who is a native. Most importantly, I give thanks now a lot more than I used to: I give thanks to my friends and my family and my community pool there in Strawberry and the friends in San Francisco who keep me in the ballgame and still let me kick tires at their start-ups and share their ideas with me. I give thanks to those four or five writers out of two dozen or more journalists, the handful who cared enough about original reporting to capture and report the story about me – and its very happy conclusion – as accurately as they could.
Darin: Did greed play a part in this?
Thom: Probably, but I don't recall ever feeling greedy as in a desire for riches. I'm a poor spender of money. I do recall feeling as if I were setting the rules, that I was a pioneer in a new area of hands-on commentary, in my little space capsule at the command board. It was an intense and not overly long period, thank goodness when I was manic, hyperactive, and full of myself. I craved influence.
Darin: Under the terms of your settlement, are you allowed to trade in the stock market? Are you permitted to offer commentary? That sort of thing?
Thom: Yes I am allowed to do all of those things. The agreement was a standard consent decree. I agreed not to break the rules again when it comes to full disclosure, or accepting stock at a discounted price or anything like that if I ever decide to get back into the media biz. That and paying the SEC about $450,000 was the gist of it. I can sit on boards, run my own company, write, speak, act on stage, which I actually have done in the interim, and so on. I'll tell you one thing right off the stick though, and that's that I have no intention of examining, analyzing or discussing any particular publicly traded investment that I own or my family owns. Not now, anyway. It still hurts my synapses and jangles my ganglia upstairs just thinking about conflicted trading. I have to say that not being conflicted as a private investor is a liberating experience. Glorious, I'd have to say. Several of my themes, emerging technologies and services that I have been tracking for several years now with the help of some very smart investors, stuff such as genomic tools and multiple online role-playing games in China and innovative methods for discovering the next wave of complex pharmaceuticals, these types of companies are in good stead right now, in some cases quite profitable and showing splendid growth rates. Or at least they were when I looked the other day.
Darin: So you're not starving, even though your friends say you could use some girth.
Thom: For me, it, it meaning life/the universe/and everything, to borrow a nice title from a dead author, it has never been about money. I mean, it's nice to have money. And sure, I enjoy the jacuzzi in the bathroom -- is that the bathroom upstairs or downstairs or at the back of the house or the front or in the backyard? I can never remember which of the 4 1/2 bathrooms that darn hot tub is in! Seriously, we live in a tidy home in a sweet little neighborhood that has strawberries and lemons growing in front and back yards all over the place and landscapers charging four times the going rate that the rest of the county pays. And I am the world's worst spender of money. I guess I like the idea of hoarding instead of spending. I still own the same car I have for years, and I wear the same suits I have for years, when I have to wear a suit. And I always, always, just always use my AARP discount card at Tiffany's. Please, just ask my wife.
This is the end of part one of Stockhouse Q &A: Taking stock of Thom Calandra. Part two features Thom’s musings about his novel, “Pablo By Numbers,” and the retail investor, among other things.
To indicate your interest in Pablo By Numbers, please click here.
