Main Street might be mired in a formidable economic slump, but the top players on Wall Street earned record sums last year, according to a new Forbes magazine list.

All 20 of the financiers on Forbes’s second annual ranking of Wall Street’s top earners released yesterday made fortunes by correctly betting on the housing debacle, the rise in commodities prices, and the increasing risk of stagflation.

At least $350 million was required to crack the Top 20, some $90 million more than the year before. The collective take-home pay of the Wall Street 20 was $19 billion, a 43% rise from 2006.

Bragging rights for 2007 go to the hedge fund manager John Paulson, who shorted the ABX, the index that tracks the subprime mortgage market. Mr. Paulson, the chief executive and founder of New York’s Paulson & Co., took home $3.3 billion, according to Forbes. (He’s not related to the secretary of the Treasury, Henry Paulson.)

These moguls earned their billions by following one of the fundamental tenets of investing: The greater the risk, the greater the reward. That’s why none of Wall Street’s top earners came from a traditional investment bank in 2007. The list is composed entirely of hedge fund, private equity, and LBO players who accurately forecast the worsening economy and took full advantage of those changes.

“What we’re seeing here is the dislocation in the financial markets creating tremendous opportunities for investors who are liquid,” the managing partner and chief investment strategist of Strategas Research Partners, Jason Trennert, said.

Forbes screened investment bankers, as well as hedge fund, private equity, and mutual fund principals, and traders to compile the list. The editorial team in charge of the Forbes list considered hedge fund and LBO directors as taking 20% of profits and 2% of assets as typical fees. The take-home paychecks are net of the firms’ expenses and exclude proceeds from selling shares in their own firm or fund.

That’s why a Blackstone Group co-founder, Stephen Schwarzman, ranks 16th on the list, with $400 million in take-home pay, even though he made billions more when his firm went public last year.

“There are no regulations facing the hedge fund industry right now,” the director of hedge fund recruiter A.E. Feldman & Associates, Mitch Feldman, said in explaining why the hedge fund and LBO industry may have bested the traditional investment banking community in terms of returns last year. “All their investors are confidential, and they can do just about anything they want. The hedge fund world is very secretive and allows all sorts of exotic investments to be made.”

Other big winners were the Soros Fund Management founder, George Soros, who earned $2.4 billion last year as Quantum Endowment Fund grew by 32% after fees, according to Forbes. A 75% stakeholder in Harbinger Capital Partners, Philip Falcone, took home $1.7 billion last year. His firm raked in $11 billion on accurately betting on the subprime mortgage crisis. Citadel Investment Group’s Kenneth Griffin is fourth on the list, earning $1.5 billion last year. The Renaissance Technologies hedge fund principal James Simons rounded out the top five by pulling in $1.3 billion.

The sixth-ranked financier on the list, the oil baron T. Boone Pickens, earned $1.2 billion from his hedge fund, BP Capital, primarily on successfully speculating a rise in oil prices. (Forbes points out that Mr. Pickens predicts $150-a-barrel crude within two years.)

Others include SAC Capital’s Steve Cohen, based in Stamford, Conn., who made $1 billion, and D.E. Shaw’s David Shaw, who earned $770 million. Ninth on the list is the Centaurus Energy hedge fund’s John Arnold, whose successful energy bets helped him earn $700 million. Finishing off the top half of the list is Raymond Dalio, a principal for one for the world’s largest hedge funds, Bridgewater Associates. He made $580 million last year. According to a senior editor at Forbes, Peter Schwartz, the hedge funds that make up the 20 financiers on the list collectively increased their assets by some $2.2 trillion, or 14%, and the private equity funds raised $300 billion last year, for a total of $2 trillion in assets.