Investor alert: Dump stocks, buy comic books …

Excerpted from WSJ: ” When Stocks Tank, Some Investors Stampede to Alpacas and Turn to Drink”,  Oct.3, 2008   

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Investors have long turned to hard assets in market downturns, the idea being that if you invest in something real, it won’t disappear, even if its value declines. But analysts say this downturn is different in that real estate, the most traditional safe haven, is also sinking.

Given the gyrations in the financial markets, some investors are abandoning stocks and bonds and seeking refuge in unusual alternatives — parking spaces, for instance, and condos in Peru. Sales of exotic livestock are up. The U.S. Mint has seen a gold-coin rush.

A man in Atlanta, recently bypassed the stock market for liquid assets — $120,000 in champagnes. He bought 400 bottles, mostly 1996 vintage, that he says he plans to “sit on” for 10 or 15 years and then sell at a profit.   “The worst thing that could happen is that I drink all of it.”

Another man did invest in real estate, but not the usual sort. He became landlord of a single parking space in Chicago. He bought a 12-by-20-foot spot in the Field Harbor Parking Garage for $29,000 and rents it out. “The stock market is indicative of a lot of uncertainty. With a parking space, at least you end up with something,” he says.

An auditor in Johnstown, Pa., turned to an unusual farm animal. “I’ve lost a fortune in stocks, and my 401(k) is falling through the floor. I feel comfortable in alpacas,” she says. She invested $56,000 in a small herd that she believes has a better outlook than most mutual funds because of the animals’ breeding potential.

Financial firms are reporting that a growing number of retirees are rolling their money out of ordinary individual retirement accounts — commonly stocks, bonds and mutual funds — and into self-directed IRAs, where almost anything goes. “We’ve had people invest in a cypress farm in Costa Rica, and a condo in Croatia.”

A retired engineer, says he pulled his entire nest egg of nearly $1 million out of stock and bond funds in August and put it into a self-directed IRA. He invested some of the money in his niece’s company — which is building condos in Lima, Peru.  “I can see pictures of the land. I can see steel. I can see people working. When I put my money in a fund, I see a big list of things that don’t sound good.”

In past market downturns he saw people turn to chinchillas, worm farms and super-breeds of rabbits. Emus, too, were big. “Eventually, people got tired of them and just let them go,” he says. “To this day, you’ll be in West Texas and a big emu running wild will just come up next to your car.”

Hard-asset gurus have been advising people to buy bags of pre-1965 U.S dimes and quarters, which are 90% silver and in limited supply.

Some stock-market investors also are turning to superheroes. “There’s kind of a buying frenzy” in vintage comic books. The “Silver Age Comic Book Pricing Index” of 32 frequently traded ’60s comics, was up 14.2% in the 18 months ending in July, while the Standard & Poor’s 500 stock index was down 11%. “Spiderman is going to be here in 20 years — he’s not going away,”

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