What do investing, presidential elections, and dating shows have in common? Nice guys finish last—and that’s never been truer than it is now. Traditional choices for the value investor, like the financial sector and housing, got obliterated in the credit crunch. The once booming and “socially responsible” ethanol market got hit with a glut that plunged prices into the corn-clogged crapper. And experts are betting that more volatility is on its way as the U.S. dollar continues to slide, with some even muttering the R-word…as in recession. The only solution to this hellish investing climate is to start listening to the little devil on your shoulder. He’ll tell you to sink your hard-earned scratch into four things that have always been reliable growth industries: war, death, disaster, and sex. They consistently beat the S&P 500 and keep returns up even when the market is down. Investing in misery and vice isn’t risk-free, but deals are yours if your scruples are as weak as the dollar. And yes, it’s legal…ish.
Strategy: War
 Why it’s dirty: You can sleep at night by telling yourself you’re investing in technology—guns, missiles, warships—but really you’re banking on carnage. Most defense funds invest in the “big five” government weapons contractors: Lockheed Martin, General Dynamics, Northrop Grumman, Boeing, and Raytheon. PowerShares Capital Management (powershares.com) also includes the “homeland security” sector, and mainstream outfits like the Victory Diversified Stock Fund (victoryconnect.com) invest heavily in big government contractors like dirty money poster boy Halliburton.
Why it’s worth it: “The Index is up more than 27 percent [as of October],” says Scott Sacknoff, manager of the SPADE Defense Index (spadeindex.com). “And in four of the past six years we’ve beaten the S&P by more than 10 percent.” That’s an indication of how the entire sector is performing. See for yourself at homeland defensestocks.com, a Web portal for all war—er, defense-related—stocks.
Strategy: Death
 Why it’s dirty: In what’s called a viatical settlement—first popularized in the ’80s, when AIDS was exciting and new—you purchase someone’s life insurance policy for less than face value. The longer the life expectancy, the deeper the discount; when he dies, you collect. So not only are you waiting for a terminally ill patient to kick the bucket; you’re also pulling a scam.
Why it’s worth it: Rates of return vary wildly, but 40 percent is possible. Your investment is independent of the market—people always die—and risk can be smoothed out by using a specialized broker (check out lisassociation.org for a list). You just need to cover your ass. Unreliable actuarial data and pesky experimental cures can foil your plans, insurance companies can refuse to pay out, and a suicide can void everything. Plus, you could get scammed if a broker acquired the policy you buy via shady means. “Brokers and providers are licensed in most states and listed on our Web site,” says Julie McPeak, chair of the Life Insurance and Annuity committee of the National Association of Insurance Commissioners (naic.org). “Ask for disclosure of fees, whether there’s a contractual arrangement, and whether fair bids were made on the policies.”
Strategy: Disaster
 Why it’s dirty: Almost 600,000 vehicles were flooded and damaged in hurricanes Katrina and Rita. Many are still floating around on the market after insurance companies “totaled” them because their electronics systems got soaked. But they can be legally salvaged and resold by an unscrupulous dealer: namely, you. Simply “wash” the title by moving the car from a state where the salvage title is required to one where a new, “clean” one can be acquired.
Why it’s worth it: Buy a flood-damaged late-model BMW 3-Series for $4,000 at Insurance Auto Auctions (iaai.com) or on eBay Motors (motors.ebay.com). Spend $5,000 fixing it. Sell it for $18,000 with a new title that doesn’t reflect that you found the car upside down in a tree.
Strategy: Sex
 Why it’s dirty: Porn is a $12 billion industry, but historically almost all of that wealth has been privately held. Then about two years ago AdultVest (adultvest.com) created a pornographic investment marketplace. You can register for their funds if you have access to Peter North–size loads…of cash (at least $5,000). Or you can find a specific company and be a slutty angel investor and even bankroll a production featuring your favorite starlet.
Why it’s worth it: Porn production companies can enjoy 60 percent profit margins and collectively boast annual worldwide revenues of $57 billion, yet banks and traditional investors turn their noses up at providing capital. That’s why the less squeamish can clean up. “It’s not unheard of for investors to generate a two to six times return on their money,” says Francis Koenig, former Wall Street hedge fund guru and founder of AdultVest. Plus, “there are certain sectors we call consumer nondiscretionary,” Sacknoff says. “Like Kellogg’s, people will still want their Corn Flakes in the morning no matter what.” Turns out Corn Flakes were originally marketed as a cure for masturbation—and they’re both sure financial bets, because neither will ever go out of style.
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