We are currently witnessing a huge turmoil and downward trend in the worldwide credit and stock markets. There are millions of people, who will read the quarterly reports on the losses inflicted in their 401K savings. Many people fear that the traditional investments in stocks, bonds, and real estate will get much worse before they get better, and that we all may be teetering on the edge of a multi-year worldwide depression.Against this economic backdrop, the investment that I made five years ago in starting an alpaca ranch looks pretty darn good. Since that time, I have “diversified” my investment by adding miniature llamas and dairy goats. I can confidently say, that not only have I been able to sell alpacas and llamas every year that I have been in business, but I continue to get inquiries from well-qualified customers, who want to know how to start an alpaca ranch and how to make money with an investment in alternative livestock. Indeed, I get more inquiries that I have livestock to sell.Unlike stock and bond prices, which can fluctuate up and down (mostly down these days!), investments in alternative livestock have remained fairly stable because alternative livestock are rare commodities. That is, unlike millions of heads of traditional livestock, such as cattle and sheep, there are less than 200,000 alpacas and 300,000 llamas in the USA. For miniature llamas, there are fewer than 700 in the USA! So demand still outstrips supply for these animals.Active or Passive InvestmentBefore investing in alternative livestock, you must consider if you want to go in as an active or passive investor. An active investor is one, who actively participates in the management of the animals. Usually this means that you own an alpaca ranch and manage the day-to-day operation of the herd. However this could also include, who board their animals, yet still participate in management aspects, such as breeding decisions, shearing, and monthly worming. Passive investment means that you board the animals and leave all the animal management to someone else. For passive investors, the profit comes mainly from the sale of animals and their offspring and the animal by-products.If you are going to be an active investor, that is become an alpaca rancher, then this is probably going to mean a major lifestyle change. In which case, you will need to educate yourself about all the ins and out of alpaca and llama ranching. This is not an impossible or even a difficult task, but there is a learning curve. You’ll need to know about alpaca health and nutrition issues, breeding and birthing, optimizing pasture grass production, alpaca fiber, and marketing fiber and yarn. In addition to visiting alpaca ranches and asking questions, you’ll also want to take some workshops and read about the alpaca and llama industry in books, such as the Start Raising Alpacas Guide Book.Product Potential of Alternative LivestockAn important consideration for investment in alternative livestock is understanding what potential products can be harvested from the animals. Then you need to create your own vertical market, where you harvest the raw fiber and add value to it to create end-products that you sell for greater prices. That is, you take the raw fleece and have it spun into yarn. Then you have the yarn made into apparel and home decor items. There are buyers of the fiber at every step from raw fiber to a finished apparel, but the profit margins increase with every step towards the finished luxuriously soft apparel.The market for llama fiber is a little different than for alpaca fiber. Llama fiber tends to be coarser than alpaca fiber, but the really coarse hairs can be “dehaired,” or completely removed, in the yarn spinning process. However there are still many wonderful products that you can create with llama fiber, such as outer garments that do not touch the skin, bags, rugs, etc. I like to combine my coarser alpaca fiber from the leg and neck area with my llama fiber, which I spun into bulky yarn for rugs.