Sage Investment Advice From Exhausted Real Estate Billionaire Jeff Greene

Jeff Greene started investing in real estate as a side hustle in college and survived a downturn in the 1990s before making his first billion betting against the housing market in 2008. He spoke with Forbes about how he’s managing his investments ahead of a potential recession.

By Giacomo Tognini, Forbes Staff

As a child growing up in Worcester, Massachusetts, Jeff Greene shoveled snow and worked an 86-house paper route for the local newspaper. In college at Johns Hopkins, he worked part-time jobs ranging from teaching Hebrew to checking IDs outside the library. To pay his way through Harvard Business School, he traveled the country as a circus promoter—money that he later invested into three-bedroom houses in a town near Boston, his first foray into real estate.

Disaster struck with the real estate crash in the early 1990s, but Greene managed to scrape by. Then, in 2006, he made an audacious bet against the housing market, buying credit default swaps on subprime mortgage-backed bonds. The ensuing collapse earned him a windfall of $800 million, which he plowed into prime property in Palm Beach. It also made him a billionaire: Forbes now estimates his fortune at $7.5 billion, much of it concentrated in South Florida, Los Angeles and New York.

Forbes spoke with Greene about his knack for surviving crises and his risk-averse approach to investing.

Forbes: How did you get your first start in investing?

Jeff Greene: The way I got into real estate was kind of by accident. I was accepted to Harvard Business School in the spring of 1977, and then I needed a place to live and I wanted to move into Soldiers Field apartments, which was a beautiful modern complex. I’d already been out of college almost three years, I didn’t want to live in a dorm and I didn’t get into that apartment, it was full. So a guy who I’d gone to Johns Hopkins with, I asked him, “what do you do?” He’d gone to Harvard a year before me. He said, “Well, what I did is I bought an old three-family house out in Somerville, the next town to Cambridge. And you can buy one and you can live in one of those, rent out the other two and it’ll probably cover all your costs. You get a mortgage for 80%, so you’ll live rent free for two years and get your money back so you won’t have any rent.”

So I did that. I bought one of these three family houses, and I had worked after college and made $100,000 as a circus promoter. So this house was $37,000 with $7,000 down. I got accepted to the apartment complex, but I thought, “I already bought the house, so maybe I’ll rent out all three.” So I ended up thinking, “Wow, I’m making a 30% return, I’ve got to get more of these.” By the time I finished at Harvard Business School, I had 18 properties in this little town, Somerville, and the markets went way up. And my $100,000 cash was already a $1 million net worth. I was not even 25 and I was suddenly in real estate.

Forbes: How would you say your investment strategy has changed or evolved over the years? What’s your strategy like today?

Greene: Well, it changes as you go through the cycle of life. Starting out, I made my first $100,000 and then my first million. Then you think, “I’d like to make another million or $10 million, then $100 million.” You want to keep buying and building and growing. Now I’m 68 years old, so [my goal is] preservation of capital. The more the better, but I don’t really need to make more money. I was very careful when rates were low to lock in my rates, so I don’t have too much debt. Even the debt I have, it’s 90% locked in at lower rates.

I have five projects going on, but it’s really too much for me. I’m exhausted and I don’t like the workload, even though I know they’re good projects. Where you are in your life, more than anything, dictates how much risk you’re willing to take, how much work you want to have, and everyone’s different. I got married later and I have three young kids, so I want to spend time with my kids while they’re still young enough to enjoy it. Coming out of the financial crisis, honestly, I could have had a net worth three times what I have, because I didn’t leverage myself. I bought all these properties, I didn’t build on them. I just kept the land. I could have gone crazy. And I knew that I was giving up a lot of opportunities, but I just wasn’t that motivated for the workload or to build a bigger organization or to take the financial risk. When I was in my thirties, I wanted to conquer the world. Now I’m in my sixties, and I want to still be active and productive and make money, but I’m not willing to take risks like I was.

I had a big crash in the early ‘90s. My net worth became negative and it was a real eye-opener for me. Truthfully, from my first newspaper delivery route and shoveling snow and mowing lawns to where I was in 1991, it was a straight ride up. And then all of a sudden I wake up and my net worth is negative, and I’m fighting lawsuits. So I learned in that period, don’t be leveraged. Be prepared for slowdowns.

Forbes: We’ve talked about your strategy in the context of real estate. When you’re looking at your stock portfolio, bonds, alternative investments, is your strategy also conservative at the moment?

Greene: I’ve got a fair amount of treasuries. I’ve staggered one month and three month and six months treasuries, and I’m making five percent-ish. We’re in the Giving Pledge with Warren Buffett and Bill Gates, and you listen to [Buffett]. I’ve spent some time with him and I like a lot of the things he says. He’s very wise, that’s why he’s considered such a sage. Things like, “I’d rather buy a great company at a fair price than a fair company at a great price.”

And it’s the same thing [with real estate.] What do I want to own? I want to own great buildings, great companies. A great building is one that has stable, predictable cash flow, not a lot of volatility, that has good long-term prospects because of where it’s located, how it’s built, what it is, and it’s the same with stocks. I own some core stocks, Google and Apple and Meta. And they’ve had their ups and downs, but generally I have core holdings that I own, and you don’t pay attention to the noise of the markets. Those are the kinds of long-term assets. It’s the same with some of the properties that we own. We own some amazing properties around the country, some I’ve had for 30-plus years.

Forbes: Are there any investments that you consider your greatest triumphs? And others that were disappointments, or that you would rather have done differently?

Greene: I’m building these two towers that I’m finishing in West Palm Beach, [called] One West Palm. The market exploded out from under me. I never would’ve predicted that South Florida, during the pandemic, would have had this enormous inward migration. Rents doubled in the last five years, and demand for everything has gone through the roof and everyone’s moving here. It’s slowing a little bit now, but it’s been a big boom. That will be a successful project.

One thing I learned long ago is—and I unfortunately have not followed it as well as I could—but whenever you make a decision, if more than 50% of the reason you’re doing it is for your ego, the odds are you’ll regret it. Why did I build the two tallest buildings in Palm Beach County, over a million square feet? I’d say more than 50% for my ego. In the end, I do regret it because at the end of the day, when I’m building 200-unit apartment buildings, I could do it with my eyes closed. They’re easy. Some projects you do for the wrong reasons. So far, it looks like the market’s really going to make it successful, but not because I did such a great job as a developer.

Being a real estate developer, you’re kind of buying lottery tickets on the economic cycles. If you look at some of the big condo kings around, they make a billion dollars, they lose a billion dollars. How do you know, when you’re conceiving a project, what the market’s going to be two years later, three years later, five years later, when you’re really out trying to monetize it? You can guess. And oftentimes people are most aggressive when things are at the peak—when you should probably be pulling in—and the least aggressive when the world’s coming to an end, when you probably want to be in there, gearing up for the next up cycle.

Forbes: What advice would you give to your 20-year-old self?

Greene: Do things that make sense for you and the way you want to live your life, not for what other people will think about what you’re doing. You only have one life and you only have so much time on the planet. Whether you’re trying to build a net worth or a business, keep your eye on the ball and stay focused on the goals, whatever they may be. If your goal is to make as much money as you can, and you don’t care about anything else, then go work real hard and do everything you can.It’s important that whatever age you are, try to step back, take a deep breath and think, “Hey, is this what I wanted in my life?” Most people are just trying to make ends meet. Most people don’t have the luxury. You get a job, you pay your bills, hopefully you can get a little bit ahead and not be behind the eight ball. That’s most people’s life. But if you do have the luxury of choices, then sit back, think carefully, and make the right choices.

Forbes: What are some of the biggest risks you think investors are facing today?

Greene: We’ve had a very unusual time with this extraordinary amount of liquidity pumped into all the advanced economies. We don’t really know where it’s going to end up. We ended the pandemic with $2.1 trillion of excess savings above average levels. It was excess everything. It was excess construction projects because there was so much liquidity. More apartments were built in the last two years than any time in history.

But now I think we’re at the point where the excess savings are gone. The extraordinary amount of new wealth that people got from the liquidity, that caused housing prices to go up, and stock prices to go up and everything else, that’s dropping a little bit, so people don’t have the same wealth and the same savings. Now’s the time where these high rates could really rear their ugly head. I just had lunch with my banker and they said they haven’t made any construction loans in the last year. So everything we see out here is from the extraordinary liquidity period we had.

But now what happens when one of my properties finishes, where are these guys going to go work? Nobody’s starting any new ones. There’s no financing. There’s nobody buying houses, nobody’s buying condos, no one’s building office buildings. It was a long runoff from the excess period, and it’s now coming to an end. That’s why a lot of people are thinking we could have a significant economic downturn, starting now or early next year, as people run out of excess savings and don’t feel as wealthy.

Forbes: Given that environment, what are the particular micro or macro factors that people should pay attention to when they’re deciding how to invest their money?

Greene: If you think that we’re coming into a slowdown, then you certainly want to have as much liquidity as possible because you’ve got to be ready. You’ve got to be prepared to start making less money. If you’re a real estate investor, maybe if things slow down, your rents are not going to go up, they’re going to go down. If you’re a waiter, you’re not going to be making as many tips. If you’re a construction worker who is making $50 an hour plus overtime, maybe you’re going to be making $25 an hour with no overtime.

Be as liquid as possible. On a long-term basis, for most people, it pays to just have a diverse pool of investments because you want to be ready for anything to happen. Have diversity in your investment portfolio, so if one thing goes up, the other thing goes down.

Forbes: You mentioned Warren Buffett as someone you look to for advice. Do you have any investing mentors?

Greene: His investing style works for almost everyone. Spend all the time you have to make sure that you’re making prudent, good investments in great businesses, great real estate, and then keep your eye on them and be patient.

The other thing that he said, which I thought was very good advice, was wait for the big fat pitch. A mistake I made is too many deals. As soon as I feel like I’ve been pitched, I feel like I’m in a batting cage and I’m just swinging at everything just coming at me so fast. But sometimes, [you have to] let them go by, and that’s what he does. He lets his cash get up to billions of dollars. But then when Goldman Sachs needs money in the financial crisis, he steps up and he just waits for that big fat pitch.

All these expressions are very valuable. You want to be greedy when people are fearful, and fearful when people are greedy. And it’s hard when everyone’s greedy, and all your friends are buying and flipping houses, right? But that’s the time when you probably want to sit back and let that crazy, greedy excess pass and wait until things calm down. And then when everybody’s panicked, like is happening now in real estate to some extent, that’s the time when no one wants to touch it because it’s going to go down forever. That’s the time you want to start being greedy.

Forbes: Are there any books that you’d recommend every investor should read?

Greene: I really don’t. I can’t say I’ve got a lot of people’s books, because most books on investing really can be summed up in a couple of pages. You could read all these how to make money in real estate books, and there’ll be 100, 200 pages on it but the general gist of it is: buy quickly, put as much debt on it as possible, use the money to go buy another one, sell it, buy another one, refinance, try to turn your money quickly.


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‘Own what the Mother of All Bubbles crowd doesn’t.’ This market strategist expects stagflation and is investing for it now.

There’s always a bull market somewhere — if you can find it.

Keith McCullough encourages investors to join him in the hunt. You’ll need to be agnostic and open-minded, the CEO of investment service Hedgeye Risk Management says. If you’re wedded just to U.S. stocks, or the market’s latest darlings, you’re setting yourself up for disappointment — particularly in the hostile environment McCullough sees coming.

This coming challenge for U.S. stock investors, in a word, is stagflation, McCullough says. Stagflation — higher inflation plus slow- or no economic growth — is hardly a bullish outlook for stocks, but McCullough’s investment process looks for opportunties wherever they may be. Right now that’s led him to put money into health care, gold, Japan, India, Brazil and energy stocks, among others.

In this recent interview, which has been edited for length and clarity, McCullough takes the Federal Reserve and Chair Jerome Powell to the woodshed, offers a warning about the potential fallout from Powell’s upcoming speech at Jackson Hole, Wyo., and implores investors to discount happy talk and always watch what they do, not what they say.

MarketWatch: When we spoke in late May, you criticized the Federal Reserve for being obtuse and myopic in its response to inflation and, later, to the threat of recession. Has the Fed done anything since to give you more confidence?

McCullough: The Fed forecast of the probability of recession should be trusted as much as their “transitory” inflation forecast or a parlor game. People should not have confidence in the Fed’s forecast. The “no-landing” or “soft-landing” thesis is looking backwards. The Fed is grossly underestimating the future, doing what they always do, in looking at the recent past.

Their policy is wed to what they say. They claim they’re not going to cut interest rates until they get to their target. But any hint of the Fed arresting the tightening gives you more inflation. So there’s this perverse relationship where the Fed is the catalyst to bring back the inflation they’ve spent so much time fighting. 

Read: ‘The Fed is way late and they’ve already screwed it up.’ This stock strategist is banking on gold, silver and Treasurys to weather a recession.

MarketWatch: U.S. Inflation has come down quite signficantly over the past year. Doesn’t that show the Fed is well on the way to achieving its 2% target?

McCullough: A lot of people are peacocking and declaring victory over inflation when we’re about to have reflation that sticks. We have inflation heading back towards 3.5% and staying there.

Our inflation forecast is that it’s set to reaccelerate in the next two inflation reports, which will lead to another rate hike in September. The Fed’s view is that until they get to the 2% target they’re not done. A lot of people are really confident because inflation went from 9% to 3% that it’s getting closer to 2%, therefore the Fed is done. Given what Fed Chair Jerome Powell said, the next two inflation reports are critical in determining whether we hike rates in September. I think maybe even one in November. This is a major catalyst for the next leg down in the equity market.

The Fed is going to see inflation go higher, and they’ve already articulated to Wall Street that no matter what happens, that should constitute a rate hike. That’s a policy mistake. They’re going to continue to tighten into a slowdown. When the Fed tightens into a slowdown, things blow up.

MarketWatch: By “things blow up,” you mean the stock market.

McCullough: I don’t think the Fed cuts interest rates until the stock market crashes. The Fed is going to be tightening when the U.S. economy and corporate profits are at a low point, going into the fourth quarter. It’s not dissimilar from 1987 where all of a sudden a market that looked fine got annihilated in very short order. There are a lot of similarities to 1987 now; the market’s quick start in January, people in love with stocks. That’s a catalyst for the stock market to crash.

When the Fed has an inconvenient rule, particularly for the U.S. stock market, they just move the goal posts or change the rule. If they actually started to cut interest rates, inflation would go up faster. This is exactly what happened in the 1970s and what Powell explains is the risk of going dovish too soon – that he becomes [much-criticized former Fed chair] Arthur Burns. That’s why you had rolling recessions in the 1970s; the Fed would go dovish, devalue the U.S. dollar
and the cost of living for Americans would reflate to levels that are prohibitive.

People can’t afford reflation at the gas pump, or in their health care. It’ll be fascinating to see how Powell pivots from fighting for the people to bailing out Wall Street from another stock market crash, which will therein create the next reflation.

‘The Federal Reserve has set the table for a major event in the U.S. stock market and the credit market.’

MarketWatch: Speaking of a Powell pivot, the Fed chair speaks at Jackson Hole this week. Last year he put markets on notice for rate hikes. What do you think he’ll say this time?

Powell’s going to see inflation accelerating. I think Jackson Hole is going to be a hawkish meeting. That might be the trigger for the stock market.

Take the bond market’s word for it.  The bond market is saying the Fed is going to remain tight and seriously consider another rate hike in September. The reasons why markets crash in October during recession is that the fourth quarter is when companies realize that there’s no soft landing and they need to guide down.

The Federal Reserve has set the table for a major event in the U.S. stock market and the credit market. We’re short high-yield and junk bonds through two ETFs: iShares iBoxx $ High Yield Corporate Bond
and SPDR Bloomberg High Yield Bond
 On the equity side the best thing is to short the cyclicals; I would short the Russell 2000

MarketWatch: What’s your advice to stock investors right now about how to reposition their portfolios?

McCullough: Own what the “Mother of All Bubbles” crowd doesn’t. The things we’re most bullish on include gold
 The Fed is going to keep short term rates high and both the 10 year and 30 year go lower. Gold trades with real interest rates. I think gold can go a lot higher, towards 2,150. Our ETF for gold is SPDR Gold Shares

Also, you can be long equities and not take on the heart-attack risk that is the U.S. stock market. I’m long Japanese equities — ETFs for this include iShares MSCI Japan
and iShares MSCI Japan Small-Cap

We’re long India with iShares MSCI India
and iShares MSCI India Small-Cap
Both Japan and India are accelerating economically. Were also long Brazil iShares MSCI Brazil
which is weighted to energy. We are bullish on energy. 

MarketWatch: Clearly accelerating inflation and slowing economic growth is an unhealthy combination for both investors and consumers.

McCullough: What I’m looking for, with inflation reaccelerating, is stagflation.

Stagflation pays the rich and punishes the poor. You want to be the landlord. The prices of things people own are going to go up, and the prices of things you need to live are also going to go up. So for example, we are long energy, uranium and timber as stagflation plays. ETFs we’re using for that include Energy Select Sector SPDR
Global X Uranium
and iShares Global Timber & Forestry

One positive thing that happens from stagflation is that because it’s so hard to find real consumption growth, there’s a premium on the growth you can find.

If there is something that actually accelerates, then those stocks will work, which puts a nice premium on stock picking. You can be long anything that is accelerating because so many things are decelerating. So avoid U.S. consumer, retailers, industrials and financials, which are all decelerating. Health care is our favorite sector, which we own through the ETFs Simplify Health Care
and SPDR S&P Health Care Equipment

Instead, people are betting we’re going to go back to some crazy AI-led growth environment. Now everyone thinks everything is AI and rainbows and puppy dogs. I’m old enough to remember we were in a banking crisis in March. From an intermediate- to longer-term perspective, I don’t know why you wouldn’t want to protect yourself until this inflation cycle plays out.

Also read: Jackson Hole: Fed’s Powell could join rather than fight bond vigilantes as yields surge

More: Will August’s stock-market stumble turn into a rout? Here’s what to watch, says Fundstrat’s Tom Lee.

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