Herding Money?

Kelly Wallace is a CBS News correspondent based in New York.

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When producer Melissa Smith first mentioned the idea of doing a story on how more and more people, anxious about the stock market’s daily gyrations, are kissing their stocks and bonds goodbye and saying hello to unconventional investments, like alpacas, comic books and wine, I kind of thought these folks might be a little crazy. I mean, alpacas? How could the llama-like creatures possibly be profitable? And is it really wise to turn your back on your 401k and a market which, over the long run, traditionally brings in a positive return?

I don’t have the answers to all of those questions, but after doing the story for tonight’s CBS Evening News with Katie Couric, I admit I did wonder if breeding alpacas could turn me into a millionaire. No, I’m not entirely serious, but meeting Peggy Parks, who started investing in alpacas a year ago, did get me thinking.

First, let’s cover some of the facts. We don’t have a number but anecdotal evidence shows more people are pulling away from traditional retirement funds and pursuing what experts call hard, tangible assets instead. According to the U.S. Mint, there is unprecedented demand for gold and silver coins. Stanley Gibbons, the world’s oldest and largest rare stamp dealer, reports a huge increase in the rare stamp market in the past few months. Demand for alpacas and bison also appear to be up. So are sales of comic books.

Rick Whitelock of Lynn Haven, Florida estimates he’s invested about a million dollars in comics in the past three years and is enjoying returns Wall Street can only dream about right now. "If you had $80,000 or $90,000 and you had to put it in the stock market, I think today on paper, it’s probably worth $45,000 to $50,000, but you could have taken that same $80,000 or $90,000 and easily turned it into $120,000 or $150,000 or even more, if you had made the right comic book purchases," Whitelock said in an interview. “So you’re looking at a negative 40 percent return in the stock market versus a maybe 200 percent or more in the comic book market."

Peggy told me three years ago she stumbled upon an alpaca brochure and didn’t even know what an alpaca was. She started doing her homework, which included reading a catalogue about alpaca investing (there is a catalogue for such a thing!), going to alpaca auctions and talking with other alpaca breeders. Then, a year ago, she started breeding alpacas. She no longer invests in her 401k.

Her friends feel a bit like I did when I first heard about her story. "They do think I’m crazy because they can’t imagine the worth of (alpacas) and they always ask me what I do with them?" The 49-year-old, who’s an auditor in her day job, told me this during my visit to her farm in Johnstown, Pennsylvania.

Turns out a breeding female alpaca can fetch upwards of $15,000, while a unique alpaca, one deemed worthy enough to be shown at alpaca shows, can go for a price in the six figures. Alpaca fleece is also used in high-end clothing.

But before you rush out to buy alpacas or invest in comic books, consider this: Investors turned to tangible assets in the past during other times when the market was tumbling and they didn’t always come out ahead.

Case in point: investing in emus. Breeding them for their lean, low-fat meat was all the rage in the '90s. “When folks bought these birds, they thought they were gonna make a fortune and finally [they] couldn’t keep them up because they were losing so much money, they turned them off into the wild,” said securities expert Joseph Borg. His agency, the Alabama Securities Commission, has issued an alert, warning investors not to make any sudden and uninformed decisions in these uncertain economic times.

I asked Peggy about Borg’s concerns and the plight of the emu investor. She said she wasn’t worried. "The emus were short-lived, very short-lived. The alpacas have been around for 25 to 30 years in the United States and have been very beneficial to a lot of people who invested early."

In 10 years, Peggy predicts she could have a million dollars for her retirement. We’ll have to catch up with her in 2018 to see if she’s right. And if she is, I’ll be kicking myself for not taking the plunge when it entered my mind, even just briefly, during my time in Johnstown.