Street Speculator

Jeff Greene was already a well-known real estate investor before his recent investment in that industry netted him about $1 billion. His investment decision was more common sense than analytical rationalization.

What Greene did was the direct opposite of that which Wall & Main Street America dived into. He bet on people’s greed. And Won convincingly.

What Jeff Greene did was to buy Credit Default Swaps in Florida and California sub-prime mortgage backed securities. Basically, if these loans portfolios ever defaulted, the seller of the Credit Default Swap would pay the buyer (Mr. Greene) the lost value amount.

So, if certain securities after default are worth only $.07 on the dollar (as determined by a Bankruptcy judge or credit rating agency), the CDS seller would pay the buyer the difference. In our example, the remainder value would be $.93 on the dollar. Not a bad investment return. This is especially true for those purchasing default protection without holding the underlying securities.

These CDS products were the cause of Bear Sterns and Lehman Brothers demise, while causing AIG to function daily on U.S. government life support.

Jeff Greene is the 2008 Investor of the Year! No bailouts for this man.