.
In this article I cover the stock screening strategy influenced by the late Richard Driehaus and give you a list of stocks that currently pass the screen based on the approach. AAII has developed two screens based on Driehaus’ strategy; please note that the following performance and passing companies list is for the original screen, not the revised screen. The Driehaus strategy involves identifying and buying stocks in a strong upward price move and staying with them if their upward price movement continues.
Driehaus’ momentum approach to investing benefits from strong market periods. As of November 30, the AAII Driehaus screen is up 51% year to date. Historically, the screen has been successful, returning 11.2% annually since inception in 1998, while the S&P SmallCap 600 index has returned 7.0% annually over the same period.
Driehaus: A Pioneer of Momentum Investing
Envision a snowball rolling down a hill: As it rolls along, it picks up more snow, which causes it to move faster, pick up even more snow and move even faster.
That’s the basic strategy behind momentum investing—purchasing stocks that are rapidly rising in price in the belief that the rising price will attract other investors who will drive up the price even more.
Driehaus was one of the champions of momentum investing, favoring companies that exhibit strong growth in earnings and stock price. He is not a household name, but the firm he founded, Driehaus Capital Management in Chicago, Illinois, ranks as one of the top small- to mid-cap money managers. His success landed him a spot on Barron’s All-Century Team in 2000—a group of 25 fund managers that includes such investment luminaries as Peter Lynch and John Templeton.
This article focuses on Driehaus’ momentum strategy, which is discussed in the book Investment Gurus by Peter J. Tanous (New York Institute of Finance, 1997).
The Momentum Approach
Driehaus emphasized a disciplined approach that focuses on small- to mid-cap companies with strong, sustained earnings growth that have had “significant” earnings surprises. If a company’s earnings are slipping, it is eliminated. Ideally, you would like to see improving earnings growth rates.
Driehaus used positive earnings surprises as a “catalyst.” An earnings surprise takes place when a company announces earnings different from what has been estimated by analysts for that period. When the actual earnings are above the consensus estimate, this is a positive earnings surprise; a negative earnings surprise occurs when announced earnings are below the consensus estimate. Another factor is the range of earnings estimates—a surprise for a company with a narrower range of estimates tends to have a greater impact than a surprise for a company whose estimates have a greater dispersion. In general, positive earnings surprises tend to have a positive impact on stock prices.
Another key to momentum investing is to recognize when the momentum is beginning to fade; when sellers begin to outnumber buyers. Thus, investors need to closely monitor the company itself, as well as the market, and therefore it is a strategy that makes sense only for those willing to keep their fingers constantly on the pulse of the stock.
Driehaus cautioned investors to be mindful of events such as earnings announcements or warnings and earnings estimate revisions—anything that could either signal the slowing of the upward trend or propel the price even higher. In addition, investors should gauge the direction of the industry in which the company operates as well as the broader market environment, both of which could affect the individual holdings.
Earnings Growth Screens
The heart of the Driehaus method is to identify those companies with improving earnings growth rates. To find those stocks that are exhibiting sustained or increasing growth rates in earnings per share, the screen first filters for stocks whose year-to-year earnings growth rate is increasing. The screen examines the growth rates in earnings from continuing operations from year four to year three, year three to year two, year two to year one and from year one to the trailing 12 months. It also requires an earnings growth rate increase each period over the rate that preceded it.
There is a balancing act when comparing year-over-year earnings growth. You want to use enough periods to try to capture a trend but don’t want to use too many where the rest of the market has realized the trend and bid up the stock price.
Another filter stipulates that, at a minimum, a company has experienced positive earnings over the trailing 12 months. Many of the companies that pass the earnings growth rate screen are not yet profitable—they do not necessarily have positive earnings.
One last point to keep in mind about earnings growth concerns the base earnings level used to calculate earnings growth. For instance, two companies with 100% growth in earnings from year two to year one would be considered on an equal footing at first glance. However, upon closer examination, it turns out that Company A’s earnings have gone from $0.01 to $0.02 per share, while Company B’s earnings have risen from $0.50 to $1.00 per share—telling a much different story. Therefore, when you see an extremely high growth rate for a company, you may wish to check where the company started. Growth rates are very helpful in identifying interesting stocks, but you should look at the underlying figures to gauge the true significance of these changes.
Earnings Surprises
After identifying companies with accelerating annual and quarterly earnings growth, the next step in the AAII Driehaus momentum strategy is to look for companies most likely to continue that trend in earnings growth. One event Driehaus suggested seeking is a “significant” positive earnings surprise, where the company’s reported earnings exceed the consensus estimate.
Earnings estimates are based on expectations of a company’s future performance; surprises signal that the market may have underestimated the company’s future prospects in its forecast.
Driehaus did not quantify what he considered to be a “significant” earnings surprise. However, studies show that analysts tend to be pessimistic when it comes to their quarterly earnings estimates. Therefore, it is more likely that a company will report a positive earnings surprise than fall short of the consensus estimate.
Price Momentum
Like most investors, Driehaus remains invested in a stock until he sees a change in the overall market, the sector or the individual company. If he believes that trend will continue, he has no qualms about buying a stock that has already seen a rapid rise in price.
Aside from strong, sustained earnings growth and positive earnings surprises, there are several other characteristics that Driehaus looks for to identify stocks that will continue their upward trend. These characteristics primarily concern momentum.
The first momentum screen looks for stocks whose price has experienced a positive increase over the last four weeks; the larger the required price increase, the stricter the momentum screen.
The second momentum screen focuses on relative strength. Relative strength communicates how well a stock has performed compared to some benchmark—usually a market or industry index—over a given period. A positive relative strength means that the stock or industry outperformed the S&P 500 index for the period, while a negative relative strength means it underperformed the S&P 500 for the period.
The relative strength screens here provide two measures—the firm relative to the S&P 500 and the company’s industry relative to the S&P 500.
The first relative strength screen seeks companies that have had stock performance better than that of the S&P 500 over the past 26 weeks. The 26-week time period allows for patterns to develop for both the industry and the company. Shorter time periods tend to produce false signals, while longer time periods may signal a trend that has already ended. The 26-week period provides a solid middle ground.
The last relative strength measure compares the prospective company’s industry and how it has performed relative to the S&P 500. Driehaus would rather buy a stock in a strong industry group even if its earnings growth is weaker than buy a stock with stronger earnings growth but in a weak industry. This is because strength or weakness in an industry as a whole can have a strong impact on the performance of an individual company. While this step cannot be automated with AAII’s Stock Investor Pro, you are able to view the industry relative strength data and may wish to manually remove those companies that fail to meet the criterion. Our results include those companies whose industry relative strength is below that of the S&P 500.
Small- And Mid-Cap Universe
One difficulty that can arise when attempting to invest in small-cap stocks is that they may lack liquidity, meaning they have relatively low daily trading volume. This may not be an overriding concern for a buy-and-hold investor, but fast-paced momentum investors need sufficient volume and float (number of shares freely tradeable) to buy and, more importantly, to sell shares with ease.
Once again, the rules are subjective. A key factor is how many shares will be bought and sold during each trade; the more shares you will be buying and selling, the higher the daily volume that should be required. Buying 1,000 shares of a stock that typically trades on volume of 10,000 shares per day will most likely be more difficult than buying 100 shares of that same company.
The AAII Driehaus screen uses the percent rank function in Stock Investor Pro, which breaks down the entire database in percentiles for a given data field. Companies are required to have a daily trading volume that falls in the top 50% of the database.
The results of any type of momentum screen will mirror the current sentiment of the market—companies in the “hot” industries will be favored over less popular industries.
Summing It Up
The momentum approach to stock selection used by Driehaus identifies companies with strong sustained earnings growth accompanied by earnings announcements that exceed analysts’ estimates and upward-moving prices. The approach seeks the “home run” that will provide above-average returns. The key is to have a system in place that gets you out of a trade with only a minimal loss while allowing the winners to run until the momentum dies.
By implementing a strategy built on discipline and careful examination of a company, its industry and the market, momentum may be on your side. However, remember that screening is just a first step. There are qualitative elements to examine that cannot be captured by a computer-generated list. Further fundamental analysis is necessary for successful investing.
Stocks Passing the Driehaus Screen (Ranked by Four-Week Price Change)
American Association of Individual Investors
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The stocks meeting the criteria of the approach do not represent a “recommended” or “buy” list. It is important to perform due diligence.
If you want an edge throughout this market volatility, become an AAII member.
Check out my website.
Some property investors like to go in with an aggressive acquisition strategy, while for others, patience is a virtue.
On this episode, co-hosts Paul Glossop and Phil Tarrant take a deep dive into what pragmatic property investing looks like for investors who like time to measure their decisions and gravitate to a slow and steady approach.
To illustrate the strategy, the duo delve into a case study of a couple who have amassed an impressive portfolio over years of investing. Their story is a testament to the fact that successful property investment doesn’t always require hyper-aggressive activity. Instead, it often involves making consistent, well-considered choices over time, adapting to life’s changes, and planning for contingencies.
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Investment banks and asset managers unveiled lofty ambitions to bolster diversity after the Black Lives Matter movement’s surge three years ago.
But the experience for many ethnic minorities working in the City is getting worse, according to a wide-ranging survey of 800 senior staff in finance.
Investment banks saw the biggest drop of any sector in the 2023 Racial Equality Index, compiled by non-profit Reboot, scoring 65 out of a possible 100, down from 67 the previous year.
Meanwhile, asset managers’ score declined for the second consecutive year to 63, the worst of any sector in the City, lagging hedge funds, insurance and wealth management. The score across financial services this year was 65, down two points from 2022.
Reboot’s research found that 40% believed chief executives were not committed enough to tackling racial discrimination in the workplace. Nearly half of these respondents said bosses did not understand the impact of racism, and 43% said they believed CEOs feared backlash both within their organisation and externally.
READ There are 1,500 senior dealmakers in Europe — just 20 are Black
Exclusive research by Financial News earlier in 2023 found that in a sample of more than 1,500 senior dealmakers in the world’s largest investment banks, just 20 are Black.
Banks have pledged to increase the proportion of Black employees in their ranks. Goldman Sachs wants 7% of its UK vice-presidents to be Black by 2025, while Citigroup aims to increase its proportion of Black employees in the country to 3% by the same year.
In asset management, just 2% of the UK industry is Black, according to research by the Investment Association.
“This year’s results show a lot more still needs to be done and structural change is key to moving the needle,” said Noreen Biddle Shah, founder of Reboot. “In its recent consultation, the Financial Conduct Authority demonstrated a sophisticated understanding of the nuances surrounding progressing diversity, equity and inclusion. It pinpointed the need for better data and acknowledged that for ethnicity, it should be broken down with sufficient granularity.”
“Real lasting change within organisations can only happen if there is continuous, proactive commitment from CEOs and senior leaders to actively address and confront racism,” added Baroness Helena Morrissey, chair of the Diversity Project UK and a Reboot advisory board member. “This obviously cannot take place overnight, but it is important that senior leaders do not drop the ball amid other socio-economic issues.”
While financial services organisations have pledged their support behind initiatives like 10,000 Black Interns, a project to bolster racial diversity at the entry level, there is still a lack of transparency about race in the City.
Reboot has called for more firms to sign up to ethnicity pay gap reporting to increase transparency and representation of ethnic minorities in the sector. Its survey showed that 63% of financial services employees would be prepared to provide personal information in order to create an ethnicity pay gap report, while 33% said they would be unwilling to do so.
To contact the author of this story with feedback or news, email Paul Clarke

Cheri Alguire / Getty Images/iStockphoto
Housing affordability has been a growing issue across the country for years, with higher interest rates making already expensive homes even farther out of reach for many.
According to ATTOM, a provider of property data, an annual salary of $75,000 is needed to be able to afford a typical home in more than half of nearly 600 US markets it analyzed for affordability. In its report released in June, it found that the most unaffordable counties to purchase a home were concentrated on the California coast and in Manhattan.
In New York County, an annual wage of more $383K is needed to afford a typical home. Areas surrounding San Francisco are close behind, where annual salaries of around $350K are needed to live in places like San Mateo, Santa Clara and Marin County. Across California, 35 cities in the state have an average price of over $1 million, according to SmartAsset. Palo Alto, the most expensive market in SmartAsset’s rankings, boasts average home prices of $3.2 million.
Often what these locales have in common are a combination of factors including low inventory coupled with high demand due to quality-of-life standards and strong job markets for skilled, well-paying jobs. For real estate agents in markets like these, it has become challenging serving clients of limited means.
“As a licensed real estate broker with 17 years of experience, I’ve witnessed the dream of homeownership fade into a distant dream for many aspiring buyers in the face of skyrocketing prices,” said Teddi Schill, founder of Raleigh Area Property Group in North Carolina.
“The consequences of this crisis are far-reaching, impacting not just individuals but entire communities,” Schill continued. “The lack of affordable housing contributes to economic inequality, social mobility barriers and disenfranchisement among those priced out of their neighborhoods.”
GOBankingRates reached out to real estate agents in some of the most out-of-reach markets to find out more.
Oak Bluffs, Massachusetts
Oak Bluffs is a town on the island of Martha’s Vineyard off the coast of Massachusetts and is accessible only by ferry or air. Grace Hagerty, principal broker/owner of Hagerty Real Estate, says that the island’s reputation as an exclusive destination attracts affluent buyers willing to pay a premium for luxury homes and waterfront properties.
With an average home value of $1.1 million, a recent snapshot of homes for sale in Oak Bluffs listed on Zillow bottomed out at $798K for a 700-square-foot cottage, to more than $11 million.
“Oak Bluffs, like all other towns on island, have strict zoning regulations and a commitment to preserving its historic charm. This results in limited opportunities for new housing developments and drives up prices on existing homes,” Hagerty said.
“Job opportunities on Martha’s Vineyard, including Oak Bluffs, are often seasonal and tied to the tourism industry. This makes it challenging for year-round residents to afford homes, as they face seasonal employment fluctuations,” Hagerty continued. “While there have been efforts to create affordable housing solutions on the island, the demand for such housing often exceeds the supply, making it difficult for many people to find affordable options.”
San Francisco, California
Rory Donadio, CEO of Tribeca Capital Group LLC, works in the San Francisco area, where the median price of a home now exceeds $1.3 million.
“This escalation in prices has been driven by a combination of factors including limited housing supply, high demand due to the tech industry boom, and geographical limitations that prevent sprawling development,” Donadio said.
“The cost of living also ranks among the highest in the country, making it even more challenging for people to save for a down payment. This affordability crisis has led to a stark income inequality, with a widening gap between the tech affluent and the rest of the population. The high prices are pushing out middle and low-income residents, contributing to an increase in homelessness and an exodus to more affordable areas.”
San Diego, California
California’s southern gem has long been known for its unaffordability.
“Even by California standards, San Diego is notoriously unaffordable both in terms of home prices and cost of living,” said Peter Evering, business development manager at Utopia Property Management in San Diego. “There’s an inside joke here in our San Diego office that living is cheaper anywhere than here in San Diego. And it’s true.”
Typical San Diego home values are over $955K. Homes priced at $500K or less, Everling said, usually are less than 1,000 square feet. He added that rent prices are also sky-high, with the average rent for apartments hovering at $3,000 for an average size of just 870 square feet.
“Not even the temporary exodus of renters during the height of the pandemic put a dent in the rent here, and now that people are coming back, things are only going to get worse,” he said.
Sagaponack, New York
In this small village in the Hamptons, the median home list price in October was nearly $7 million, making it one of the most expensive zip codes in the country.
Sagaponack “has become a summer playground for the wealthy and famous,” said Zach Shelley, founder and CEO of A-List Properties in Dallas.
“Its beautiful beaches, luxurious homes and proximity to New York City make it a highly desirable location for wealthy individuals looking for a retreat from the hustle and bustle of city life,” Shelley said.
Just 4.5 square miles, this enclave has a year-round population of only about 350 people, while its part-timers reportedly include celebrities like Drew Barrymore and Jimmy Fallon. Sagaponack is also somewhat notoriously home to one of the largest single-family homes in the country: a 100,000-square-foot estate belonging to billionaire businessman, Ira Rennert.
Jackson Hole, Wyoming
Realtor Latham Jenkins of Live Water Jackson Hole called this Wyoming hot spot, “one of the most expensive gateway communities in the country.” With breathtaking scenery and wild-west allure, median list prices are close to $1.5 million for homes here.
“This is because less than 3% of Teton County’s 2.7 million acres are privately owned,” Latham said. “Jackson Hole is nestled in a valley surrounded by protected lands, restricting the expansion of the town. Everyone wants a piece of the pie, but there’s only so much pie to go around,” he added.
Once a rugged cowboy town, Jackson Hole has become a magnet for celebrities, executives and luxury-seekers, Latham said. “As demand from this demographic increases, so do property values. It’s not just a house; it’s a status symbol.”
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The housing market is a dynamic and ever-changing landscape. It plays a crucial role in the economic health of a region. Corrections in the housing market rank among the key factors that significantly impact this industry. Understanding housing market corrections is essential for investors, policymakers, and homeowners alike. These corrections can impact financial stability and housing affordability.
A housing market correction refers to a significant change in property prices. Typically it follows a period of rapid and unsustainable growth. Many variables, such as swings in interest rates, economic downturns, population patterns, or speculative bubbles, can cause such corrections. When prices soar to unsustainable levels, a correction changes the market with its fundamental value.
We must understand that these events are required to sustain a healthy and stable housing market. Even though “correction” may have negative connotations. They help prevent the formation of housing bubbles and the subsequent devastating crashes that can harm the broader economy.
In this exploration of housing market corrections, we will examine the various real estate investment strategies during a housing market correction. By understanding these market dynamics more deeply, stakeholders can make informed decisions. They can also navigate the opportunities presented during a housing market correction.
How to invest through housing market corrections
Housing market corrections can be challenging for investors. Property values may decline, demand weakens, and financial uncertainties loom. However, savvy investors can still find opportunities to thrive during these downturns with careful planning and strategic thinking. In the following paragraphs, we will explore various real estate investment strategies that can be employed during a housing market correction.
1. Research and Analysis
The first step in navigating a housing market correction is conducting thorough research and analysis. Understanding the underlying causes of the correction, local market trends, and economic indicators can help investors anticipate the depth and duration of the downturn. Gathering data on supply and demand dynamics, job growth, population trends, and interest rates will aid in identifying potentially resilient markets and property types.
2. Cash is King
During a market correction, liquidity becomes paramount. Cash reserves enable investors to seize opportunities when distressed sellers are motivated to offload their properties quickly. With cash in hand, investors can negotiate better deals. They can have a competitive advantage over those who rely solely on financing.
3. Focus on Income-Producing Properties
In times of market correction, income-generating properties such as multifamily units and commercial real estate tend to fare better than speculative residential investments. These assets can provide a steady cash flow even in a downturn. It makes them attractive options for investors looking to weather the storm.
4. Target Distressed Properties
Distressed properties, such as foreclosures and short sales, are prevalent during a housing market correction. These properties are often sold at a discount. They present excellent opportunities for investors willing to take on some risk. Yet, careful due diligence is essential to understand these properties’ potential risks and costs well.
5. Embrace Value-Add Strategies
Value-add strategies involve making improvements to a property to enhance its value. During a market correction, renovating and repositioning properties can be a lucrative approach. Investors can increase the property’s market value and rental income potential by buying underperforming or mismanaged assets at a lower price and then investing in upgrades and management improvements.
6. Diversification
Diversification is a timeless investment principle that remains relevant during market corrections. Spreading investments across different property types, locations, and risk profiles can help mitigate potential losses and reduce portfolio volatility. This strategy can protect investors from downturns in specific regions or sectors.
7. Long-Term Vision
Investors who adopt a long-term vision are better equipped to ride out market corrections. Real estate is an asset class that tends to appreciate over time, even if there are short-term fluctuations. Those who can weather the storm and hold onto their properties during the correction will likely reap the benefits of a rebounding market when conditions improve.
8. Conservative Financing
During a market correction, lenders may become more risk-averse. It makes securing financing for real estate investments difficult. Thus, we need to approach financing conservatively and avoid over-leveraging. Low leverage and favorable loan terms can cushion during tough economic times.
9. Adapt and Innovate
In challenging market conditions, adaptability is critical. Investors should be open to exploring emerging market trends and adopting innovative strategies. For instance, the rise of remote work during the COVID-19 pandemic has influenced preferences for properties with more space and home offices. Recognizing and catering to such shifts can position investors for success.
Protecting against real estate crashes
During real estate crashes, it is crucial to implement strategies to protect yourself from potential financial losses. Here are five essential steps to safeguard your investments:
First, consider diversification. By diversifying your real estate portfolio, avoid putting all your eggs in one basket. Instead of focusing solely on one property type or location, spread your investments across various properties and markets. This approach can help mitigate risks associated with localized market downturns and provide stability during a crash.
During challenging times, maintain enough cash reserves to cover mortgage payments, property expenses, and other financial obligations. A reserve fund ensures you can weather the storm and avoid forced selling of properties at discounted prices, preserving your long-term investment goals.
Consider adopting a long-term perspective when investing in real estate. Market fluctuations are a natural part of the real estate cycle, and crashes are often followed by periods of recovery and growth. With a solid, long-term investment vision, you’ll be better equipped to ride out the downturn and benefit from subsequent upturns.
Be cautious with your financing decisions. Avoid taking on excessive debt or high-risk loans during boom periods, as this can leave you vulnerable during a crash. Opt for conservative financing options that allow you to comfortably meet your financial commitments, even if the market experiences a downturn.
Lastly, stay informed about real estate trends and market indicators. Regularly assess the health of the real estate market, including property prices, vacancy rates, and overall economic conditions. This information will help you make informed decisions and take proactive steps to protect your investments in case of a market downturn.
Conclusion
In conclusion, navigating the real estate market during a housing market correction requires a thoughtful and strategic approach. Investors should focus on building a resilient and diversified portfolio, emphasizing cash flow and long-term value. During a downturn, opportunities may arise in distressed properties, which can be acquired at lower prices. However, careful due diligence and risk assessment are crucial to avoid pitfalls.
Moreover, staying informed about market trends, economic indicators, and government policies can provide valuable insights for making well-informed decisions. Maintaining financial stability, having access to ample liquidity, and being prepared for extended holding periods are essential in weathering market fluctuations.
Remember, a housing market correction can be a double-edged sword. It offers opportunities for savvy investors but also carries inherent risks. By adopting a patient and strategic approach, investors can position themselves to navigate the challenges and emerge more robust in the long run. Flexibility, adaptability, and a comprehensive understanding of the real estate landscape are crucial to success in any market environment, including correction times.
Let us know in the comments below whether you consider a housing market correction beneficial and what strategies you would implement to stay covered by its pitfalls.
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.
MORE FROM FORBES
Investor interest in telehealth surged during the Covid-19 pandemic. While the healthcare industry’s widespread adoption of telehealth was driven by necessity due to social distancing practices, such expansion would not have been possible without federal and state governments waiving many legal and regulatory requirements that had previously hindered such telehealth growth. Many of these waivers were temporary and tied to public health emergencies (“PHEs”) which either have already or will soon expire. In turn, the volume of telehealth investments has already begun to decline. In fact, 2023 is projected to be the lowest telehealth funding year since 2019. This begs the question – is the slowing telehealth investment due to the tightening credit markets and an expected economic downturn, or should the telehealth industry expect the trend of decreased investor interest to continue in a post-PHE world?
A review of federal, state, and private payer activity indicates interest in telehealth remains strong. As such, as the credit market stabilizes and fears of a recessions begin to recede, we expect investor interest in telehealth to return.
Background on pandemic telehealth coverage policies
Prior to the Covid-19 pandemic, payers had created numerous policy and coverage barriers that served to limit widespread telehealth adoption. For example, Medicare had requirements preventing patients from receiving telehealth services from their homes, as well as the frequency limits of certain telehealth services. Many state Medicaid programs and private payers had similar telehealth restrictions. On January 31, 2020, a PHE was first announced at the Federal level. Pursuant to the PHE, the Department of Health and Human Services, Centers for Medicare and Medicaid Services (“CMS”) waived many of the key Medicare telehealth requirements that had previously limited widespread telehealth adoption, with state Medicaid programs and private payers quickly following CMS’ lead.
Insights on telehealth interest from federal, state and private payer action
The federal telehealth waivers were set to end when the federal PHE expired on May 11, 2023. Although CMS was supportive of continuing expanded telehealth coverage, many restrictions on telehealth were set by statute, and therefore congressional action was required to permanently change policies. Under heavy industry pressure, on December 29, 2022, Congress temporarily extended many of the telehealth flexibilities afforded by the PHE to Medicare beneficiaries through December 31, 2024. Given the current gridlock in Congress, legislative efforts to further codify telehealth coverage expansion are unlikely to be revisited until late 2024. While budgetary pressures may continue to lead to temporary rather than permanent extensions, with CMS, industry, and public support, Congress is unlikely to force a return to a pre-pandemic telehealth world.
When it comes to making coverage determinations, states often follow the lead of Medicare. However, given the expectation that Congress will not act further on telehealth solutions until late 2024, state action provides helpful insight into the strength of the telehealth industry post-PHEs.
Many state Medicaid programs offer more generous telehealth coverage policies that have continued to broaden in the last couple of years. States have long removed geographical restrictions imposed on where telehealth services take place. In fact, Hawaii, Montana, and Maryland are the only state Medicaid programs that still restrict reimbursable telehealth services to rural areas. Furthermore, 37 state Medicaid program plus Washington, D.C. allow patients to receive telehealth services in their home. Removing geographical restrictions and increasing the types of eligible originating sites means that more patients, including previously underserved populations, can access telehealth services.
With respect to the delivery method of telehealth services, all state Medicaid programs reimburse for live video and 36 state Medicaid programs and Washington, D.C. also reimburse for audio-only telehealth services. Moreover, 28 state Medicaid programs reimburse for asynchronous telehealth services, also referred to as store-and-forward policies, which allow providers and patients to directly share information with each other before and after telehealth appointments. This movement by state Medicaid programs beyond the historical live video requirements provides reimbursement opportunities for telehealth providers and technology. The success of such programs could also lead to further adoption from Medicare of store-and-forward services (which are covered only covered by Medicare in Hawaii and Alaska as part of a telehealth demonstration project).
States have additionally taken legislative action to address private payer reimbursement for telehealth services. The majority of states have passed service parity laws, requiring telehealth services to be covered if they would otherwise be covered if rendered in-person. Payment parity laws, which 24 states have passed, require telehealth services to be reimbursed at the same rate as in-person services.
Beyond the flexible telehealth policies provided by state Medicaid programs, states are demonstrating commitment to telehealth services by announcing their own investments into telehealth offerings. For example, Minnesota’s Department of Health released a report in June 2023 detailing how telehealth services have filled in the gaps of healthcare access and delivery. Other states, like Ohio and New Mexico, are expanding broadband access to remove the technological barriers to telehealth access. Ohio is concentrating its broadband expansion efforts to providing telehealth access to K-12 students and Governor Grisham of New Mexico recently announced that a part of the state’s $675 million federal grant to expand broadband access throughout the state will be allocated to improving access to telehealth services. In March 2023, Governor Roy Cooper of North Carolina issued a $1 billion investment plan to address the state’s mental health and substance use crisis, which includes $225 million for raising Medicaid reimbursement rates for behavioral health services and allocates $50 million towards facilitating access to mental health treatment including through telehealth for rural communities.
Private payer action also offers valuable insight into the strength of the post-PHE telehealth market. Although private payers have always had the flexibility to determine coverage for telehealth services (within the boundaries set by law), their partnerships and newly added services demonstrate commitment to coverage and reimbursement for telehealth services. For example, BlueCross BlueShield of Massachusetts’s expanded network of mental health providers recently expanded its mental health network include telehealth partners with Headway and Talkiatry, (and has correspondingly increased its mental health spend from $610 million in 2019 to $1.3 billion in 2022). Aetna provides its members access to CVS Health Virtual Primary Care, which expanded this year to include telehealth mental health care appointments with licensed therapists and psychiatrists. Similarly, Humana continues to grow its mental health telehealth platform with the addition of Array Behavioral Care in February 2022 and Valera Health in July 2023 as in-network providers.
Conclusion
Notwithstanding the end of PHEs and corresponding loss in many waivers and policies that allowed for increased telehealth adoption during the pandemic, the recent actions of state governments and private payers indicate that interest in telehealth remains strong. We therefore expect investor interest in telehealth providers and technology to similarly stay strong as economic headwinds recede.
Photo: elenabs, Getty Images
Published: Nov. 8, 2023 at 3:16 a.m. ET
By Ian Walker
UK Commercial Property REIT said it is in all-share merger talks with Picton Property Income, while cautioning that there is no certainty a deal will be agreed.
The real-estate investment trust said Wednesday that Picton has until Dec. 6 to either make an offer for the company or walk away under U.K. Takeover Panel rules.
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By Ian Walker
UK Commercial Property REIT said it is in all-share merger talks with Picton Property Income, while cautioning that there is no certainty a deal will be agreed.
The real-estate investment trust said Wednesday that Picton has until Dec. 6 to either make an offer for the company or walk away under U.K. Takeover Panel rules.
No further information on the talks has been disclosed. Any merged company will be worth around 1.1 billion pounds ($1.35 billion) based on the companies closing share prices on Tuesday.
Separately, Picton confirmed that it was in talks with UK Commercial Property over a merger and said that any combined company would be internally managed.
UK Commercial Property shares at 0810 GMT were down 0.40 pence, or 0.7%, at 55.60 pence; Picton shares were up 1.50 pence, or 2.3%, at 68.0 pence.
Write to Ian Walker at ian.walker@wsj.com