Sunday, January 8, 2017

A Rapid Response: Art as Investment

My blog from last week on investing seems to have struck a note with a number of readers.  I thought it would be as interesting to my readers as it was to me to see some of their responses.

An art dealer from New York wrote the following,  “One faction of my family dealt in colored diamonds… and I did buy some nice modest stones.  Some we made into jewelry for [my wife] to wear (which she still has) and others we put in the safe. Unfortunately, our business needed money before colored diamonds really took off. We did make a small profit but ... colored stones are now through the roof.”

He also said, “I was recently telling a collector, who bought … a Dutch 17th century paintings, that when we all started in this business, a nice 17th century panel of an interior with figures was easy to flip and sell, and they were. A Boer vomiting in the foreground was easily worth 10 grand, if his missus was relieving herself in the background, add 5 grand. Today they are compared to the furniture market [in] ‘brown wood’ which has declined.”

I heard from a friend who I first met in an Art Forum on Compuserve in the mid 90’s.  As mentioned before tastes change and as he wrote:  “…we see periods of public interest in [different areas of] collecting: rugs, Federal period furniture, Arts & Craft pottery. Books and TV shows about collecting for fun and profit, but with profit as the attention-getter. I think it signals a coming decline, a bursting bubble. New generations begin to collect and all of a sudden the furniture of 1950 becomes more desirable than 1750, this school or that period wanes in popularity.   It's nice when the market smiles at you and confirms your ‘taste' but if you don't buy what you love, you might as well be buying stock certificates. If you buy art because you just have to, you can't lose.”

This from an international collector who has been a dealer, curator and world traveler.  “Good article, so true.  You can never say or write it enough.  Investing in art is not for the weak of heart, and, to be at all successful requires ruthless behavior and lots of acrobatics.  Non merci.  We learned this in our early years in the art market, when it was considered very wrong to collect art as an investment, and the general opinion was the only collections that went up in value had been bought out of passion, and with a lot of hard work, by connoisseurs.”

From a former London art dealer echoing similar thoughts, “Art can be compared, depending on your taste to a race horse or a yacht say, which may both devalue with time, whereas art does not get worse with age. Of course there are people who make profits from art and horses and yachts but they are professionals and know what they are doing. Sometimes private investors can manage this too. And art does not suffer from costs of upkeep.”

I was delighted to hear from an actual practicing Native American Artist who wrote about her own experience and point of view, “I ran into someone over the weekend whom I have not seen in years. She purchased a giclee from me over 15 years ago and one of the first things she said to me was ‘Do I have any idea what that piece might be worth now?’ I told her I had no clue since I have not dealt with 2-D work since I started making baskets in 2008, but I hoped that it had escalated in price.  I hope investing is not why she purchased the piece but I would like to think that my work preceding my baskets is gaining in long term value too. Pricing work is such a tricky dance. It always boils down to work is worth whatever the market will bear.”

I even heard from an Art Advisor in Switzerland, “Despite what you state that Fine Art fluctuates in value based on the current TASTE of collectors, the value of TRUE MASTERPIECES (Old Masters, Impressionism, Picasso, etc.) has RARELY(if EVER!!!) retreated in comparison to ALL "Financial Assets" over the past 200 to 300 years!!! I AGREE, BUY IT because you LOVE IT and want to LIVE with IT BUT(!!!!!)......let us NOT FORGET that paying MILLIONS for a GREAT painting.......WELL......IT'S a LOT(!!!!) of.......MONEY!!!!!”

Borrowing again from the London art dealer in response,  “But the problem here is that few people can afford to buy the best art and not care about resale value. People do like to think that these beautiful objects also represent a store of value.”

I will end with a personal favorite because it confirms some of my prejudices.  This from a collector of German ceramics in the U.S.   “It speaks volumes that he (Jeff Koons) collects the great masters. That trait seems to be shared by many “modern” artists. One wonders why that appears to make no impression on collectors of their works.”

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