In the late 1970’s when British Rail was still collecting, a
friend invited me to lunch with a very successful captain of industry. He had decided that he too wanted to enter
the art investment area. He had a
fascinating idea. We would form an
investment consortium around an international group of experts. Since the fund was going to be buying older European
Art they would be individuals in France, England, The Netherlands and
Italy.
The concept was that each year the fund would be re-valued
by this same group of experts who would receive a commission commensurate with
the increase in the fund’s value.
Obviously, the businessman felt that this would encourage the experts
(mostly dealers) to buy well. Also these
were the years that the art market in many of its fields was flourishing. But I was concerned that since there are no
market tools with which to measure values, even the most scrupulous would be
tempted to err on the high side of an estimated value. This, however, was seen as a detail that
could be worked out later.
In any case, it was an exciting idea. It did
not take too many months before I had
commitments from a most illustrious group of experts. Most of them were dealers and all were raring
to go. Being professionals, and
therefore realists, they were not yet counting their profits, but all were
ready to take a chance. The financial
mogul kept the project on hold, from what I remember, for a year. Then
from out of the blue I received a phone call saying that my financer “had heard”
(those words I do remember) that diamonds would be a better investment and
therefore was scrapping the art project.
Quite a disappointment for all, but I think none of us were convinced it
would ever come to fruition in the first place. Many such schemes that have
received wide-spread publicity since, have also not come to pass.
Art investment funds always sound glamorous and exciting. These days they are usually focused on
contemporary art which
has in recent years been a hot market, particularly at auction. It is, however, also the most capricious. The hot artist of yesterday is not
necessarily the hot artist today. You
ask a collector about his/her collection and they will tell you about all their successes, but what about the
artists who did not pan out?
Investing in any area is not just about the wins but rather
the percentage of wins over losses. Of
course, much depends on timing. In 1990
my father, who collected Paris School pictures, said to me, “someday you will
be upset with me for not selling the collection now”. The comment did not register until years
later when I realized he had actually pegged the height of the market, when the
Japanese were collecting voraciously in this area.
The reason that British Rail Pension Fund did as well as it
did was the breadth of the collection.
Also, they held onto their collection for quite a number of years, and they sold their best investment of Impressionist
paintings at the height of that market when the Japanese were spending their fortunes
on Impressionism.
As a final comment on the subject, over the years I have acquired
for my personal collection works I fell in love with in several fields. Of course, I have had no objection if a work of art has appreciated
in value, but , I
have never thought of it as an investment.
Interestingly, the area where I thought about this the least was in our
photography collection. If I had, I
would have bought a lot more!
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