1. Government subsidies. Uncle Sam often guarantees big bucks while Main Street taxpayers pick up the tab; for example, drugs, energy and agriculture sectors.
2. Big fat inheritances. The super rich are the ones fighting to eliminate the so-called death tax, so they can hoard more money, pass along a bigger share, keep it in the family.
3. Little equity, lots of debt. Leverage works magic. It worked for condo-flippers. Now the little guys are having problems. But with $640 billion in subprime deals last year, insiders made lots of money in executive salaries, bonuses, commissions.
4. Nonfinancial leverage. Think of all that talent in television, movies, music and athletics. Oprah leverages Dr. Phil. Gore leverages Oscar worldwide. "American Idol" leverages millions of wannabes. Even billable time with lawyers, says Shilling, where name partners pay associates $75 an hour and charge clients $350 an hour.
5. 'Next big thing.' Invent something, but best not to be the first one in. My first computer was a Kaypro 25 years ago. I remember when Prodigy was bigger than AOL. Shilling says: "Who ever heard of Seattle Computer Works, Chux or Carterphone?"
6. Small slices of very big pies. Watch the deal-makers in investment banks, private-equity managers, mortgage lenders, CEOs, commercial banks and fast-food franchises. Imagine getting a mere 0.1% finder's fee (or better yet, a 0.1% annual "management" fee) in the $45 billion Texas Power Company deal! Or maybe the average $2.4 million salary paid today's CEOs, plus options and bonuses. And you can even do a crappy job and get fired, like the Home Depot boss, and still get severance of $240 million.
7. Cartels and monopolies. Easy money when they have control over price and supply. Get in cahoots with politicians and secure government protections through patents and regulation. Crude oil is the classic, also steel, utilities and cable TV.
8. Sell the sizzle, not the steak. P.T. Barnum was right, there is an endless supply of suckers looking for the "big money," and ripe for the pickings. We'll buy anything: Quick-buck deals from Nigerian con men, financial newsletters promising hot tips, vitamins that prevent aging, secret cancer cures and, oh yes, how-to-get-rich-quick books.
9. Feed the addict's habit. We're a nation of addicts, "sex, nicotine, caffeine, booze, drugs, cosmetics and lavish clothes," says Shilling, "as well as small luxuries like greeting cards and fancy coffee." Play on weaknesses. Tobacco agreed to a $206 billion settlement then jacked up the prices. Notice all the new high-caffeine drinks. Or sell $3.60 lattes that cost 60 cents to make. Addicts are easy pickings in America.
10. Supply picks and shovels. Who made money in the California Gold Rush? Not the prospectors. Today's new prospectors include millions of naïve investors. Today's suppliers are "stock brokers, asset managers, stock market-oriented TV and radio, real estate brokers, mortgage lenders and corn-farming equipment makers."
11. Get paid with "other people's money." Example: That desperate CEO who needs legitimacy hires consultants to justify the sale of his company, so he can get a huge severance package. "Winners include business consultants, corporate defense lawyers and soft commission dollar recipients." Shilling discusses one of his assignments; I saw this happen when I was at Morgan Stanley, lots of money for little risk.
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