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.”

Is Art a Good Investment?

Four or five years ago I wrote about art investment and looking back on it I see that things have changed.  There may be an art investment fund somewhere but they certainly no longer make the news.

Yet, the concept that it might be a good idea to invest in art still persists.  I received a cold call last week asking me about investing in art and I gave a very simple one-word answer, “Don’t!"

There are many, particularly in the scholarly and museum communities who do not believe that art should be associated with money because art is on a higher level.  Of course, that is ridiculous.  Art is usually found in palaces and with captains of industry with the people that could afford it.  If you do not find yourself in that category and want to buy a work of art which is more than a hundred dollars you want to know what you are paying for.  Still there are no sure ways to know what an art work is worth and it is most certainly not a liquid asset.

One of the main reasons for this is that the monetary value of art rests in large part on taste and fashion.  I personally do not understand or, put another way, care for the work of Jeff Koons.  Yet he is considered far and wide as a major artist worthy of exhibition and collection in the most important museums in the world.  What would happen, however, if over time more people of some weight either in the art or financial world began to feel as I do?   Seemingly overnight the works that came up at auction would bring less and less, Jeff Koons’ dealer(s) would have to ask less and before you know it your Koons investment has declined in value.   I am happy to say that Jeff Koons has a great appreciation for art and collects Old Masters among other fields.  Here is an image of the artist with one of his rabbits.

I watched it happen in the market for Renaissance bronzes where there were three major collectors and to bring a high price at auction you only need two.  Two of those collectors died the same year and the third changed her mind and started collecting in a different area.  Suddenly the prices were no longer astronomical.  So there may always be a market for Jeff Koons or Renaissance bronzes but it just will not be as high as before, and therefore not a good investment.

What, however, if you had bought that Jeff Koons because you really loved it, it gives you pleasure to look at, or, one of the reasons I buy a work of art, because it makes you smile.  In that case, it would not matter so much what the value of the sculpture or picture is because you will continue to enjoy it.

Every once in a while there are “discoveries” of “lost” artists.  Since the artist was obviously not lost and the work didn’t disappear, but rather one or more art historians started to see that a group of works related to each other and, through copious research, were able to put a name to the artist.  Should the art appeal to others at that time suddenly it becomes worth money and possibly lots of it. 

Also, if a work of art is newly attributed to a famous artist.   What if no one had thought about the work of art from great great grandpa sitting in the attic and you just want to be rid of it. So you take it to an expert at a museum, or a dealer or an auction house and they recognize it as an important piece as recently happened with a Leonardo da Vinci drawing.

“Over night” actually months or years after the work is “discovered,” this scrap of paper is worth a fortune.  The fact that it was preserved shows that there were those who cared for it but I think all would agree this was not an investment but a piece of luck.

As I said in my last Missive on this subject investing in any area is not just about the wins but rather the percentage of wins over losses.  Webster defines investment as, “the outlay of money usually for income or profit”.  Since there is no way to wring income out of a work of art do you want to take a gamble on the profit?

What Should I Collect ?

What should I collect? How do I know what is good?  What is the right price?  All these questions come to art professionals on a regular basis.

The first question cannot be answered by anyone aside from your self.  If the question is asked from an investment point of view no honest art person will answer because they do not know.  I have collected in some areas that have gone down in value, while one has risen dramatically, and  that was photography. Even there I will have to sell at the right time if I wish to profit from it, which is never my goal, though one can be seduced by the concept.

I thought by way of example of what goes through our heads from the professional and collector’s point of view. I will take some concrete examples and explain why we bought the art.  Since it is our most recent collection this will be about Native American Art, though the concepts apply to all areas of art.  We went to a silent auction to benefit the Wheelwright Museum in Santa Fe.  People crowd in and have a half hour to decide what they like and can bid until the director says stop and the top bid written on a sheet “wins”.  The guide to the pricing is usually done on the basis of the valuation given the piece upon donation.  Since these are often from dealers they have the sales price as a guide.

A couple of years ago we took my son-in-law to Indian Market and on my wife’s recommendation he bought a ceramic jar by a Navajo Artist, Alice Cling.  I loved it because of its smooth texture mottled deep brown color and delicate curves.  Still in our family it is my wife who is in charge of ceramics and her interest are in the Hopi pieces.  Now, however, at this silent auction was a Cling jar that I found equally attractive to the one I saw when my son-in-law bought it.  The starting bid was $300 and Buy Now Price (if you paid immediately it would be taken out of the auction and it was yours) was $650.  I soon learned why upon turning the jar over I saw a price tag that said $570.  So the Buy Now price was 10+% more.  I thought, not much to lose if I put down a minimum bid of $300.  Then, of course, I worried, if someone put their number on the next increment, would I put in another bid?  I kept changing my mind on that.  On the other hand there was a Katsina doll I left a minimum bid on and never looked back.  I knew I did not want to compete for it.  I had decided, however, that I would not chase the Cling to the full price.  To my total astonishment no one else bid and I got it for the minimum.  I have examined the piece several times and I can find no defect in the pot.  I guess, that for whatever reason, no one who was interested in Navajo ceramics was there that day.

That was the end of my bargain hunting for this season.  At one of the fairs we went to this summer a dealer who we had bought from in the past, Philip Garaway from California.  He had a Katsina doll with a surprise underneath its breechcloth.  Traditionally at Hopi these dolls are given to little girls to teach about the tribe’s religion and familiarize them with the hundreds of different Katsinim.  Though several tribes have made dolls the Hopi are probably best known for theirs, partly because they have made them for trade as well.  This has allowed, though not with universal approval, the doll makers some latitude, in that not all the dolls are representative of the Katsinim.   There was a tendency starting around mid 20th century to make the traditionally stylized dolls more anatomically correct action figures to appeal to the Anglo market.  As you can imagine, though this concept reached a high in the 1970’s and 80’s few were carved with such details and they were not widely distributed since there would be a limited market.  I remember that we saw one being carved on the reservation in the 90’s with a big fuss being made about showing it to us.  Like Philip Garaway’s doll, it was a Kokopelli, the fertility Katsina.  What added to the seduction for me was that Garaway had bought it back from a vice-president of Hearst publishing whom he had sold it to years before.  You may be surprised to hear that it was my wife who picked it out but then she looks for the unusual object not necessarily the sensual one.  No reason we can’t each have a different reason to acquire an object.

One of the most gratifying things one can do is upgrade.  There are different kinds of opportunities but availability is obviously the most important.  Sometimes, it is also what you can afford at the time.  Teri Greeves, as I have said in various places before, is a superb bead worker and my wife bought a simple bracelet from her at Indian Market years ago.  It was a modest bracelet for a modest sum and one could see a number of others around town.  We have followed Teri’s work, seen life size beading on canvas with images of people without faces making them even more powerful, and seen her bracelets become more and more elaborate.  So here at Indian Market, as I mentioned last week, was an opportunity to spend many times as much as on the first bracelet but get not just a much larger bracelet but a tour de force, a real work of art.  It is made with seed pearls and 24 karat gold beads imported from the Czech Republic where Teri believes that the best beads are made, definitely an upgrade!

Over more than two decades of collecting we have sought to build a good representation of every aspect of Hopi art, so today our acquisitions in this area are more selective.  We are now starting to branch out to acquire outstanding works from Native artists of other tribes.

Bits and Pieces: Collecting Fragments

Why collect fragments?  Well, there are works of art that can no longer be found on the market such as Medieval objects.  There are others that are too expensive for our pocketbook, and still others that are made up of too many pieces to collect.

For instance, you might admire a porcelain service such as the Meissen Swan Service which was originally made in 1736 for Heinrich Count von Brühl, Director of the Meissen porcelain factory in Dresden.  It was comprised of over 2,200 pieces.   Even though these services were made with many pieces you cannot find a full service for 12 today.  If you could, it would cost such a fortune you wouldn’t want to actually use it… and forget about the dishwasher!

At about the same time another service was made at Meissen.  It was known as the Sulkowski Service and was the first privately commissioned Meissen service made for one of the Ministers of Augustus III.  Each piece included the Sulkowski armorial.  I have had several decedents of that family living in North America who wanted a souvenir from their heritage.   One woman in Canada wanted to buy a plate for each of her 3 sons so that they could own a piece of their birthright.

From the concept of owning a piece from a porcelain service it is not a large leap to collecting parts of an object.  Years ago my firm, Rosenberg & Stiebel, bought a clock and stand.  This was before my time so I am not sure what happened, but either the collector of the clock was not interested in or did not have the place for the stand, or it is possible that it was decided that the stand was not original to the clock.  Thus we found it in our storage bins.   In the late 1980’s and early 1990’s we did a series of exhibitions and one was called “Elements of Style”. It was about the gilded bronze mounts that were used on French 18th and 19th century furniture.  Though not exactly a mount the clock base was a prime example of a secondary gilt bronze that conveyed the style of an object.

There is a small bronze figure made in Nuremburg around 1550 that is coming up for sale at Christies in May.  It is a Venus Marina that clearly was part of a larger piece, probably a table fountain popular in the 16th century.  You can see the marks along her side where she separated from the whole and someone placed the wiry serpent in her hand after she lost her raison d’être as a fountain.

Finally, something that I own personally and I hasten to add it is not for sale , a pair of gilt bronze lions.  They were the feet of a clock or small piece of case furniture from the late 17th century.  Quite possibly there were 4 lions as feet and one might have been lost when the object was moved, so at least one had to be removed.  A small piece of bronze was added to cover the hole on the lions backs where they were attached to the piece.  But what wonderful objects these are, so beautifully cast and chased.  A cabinet in the Bayerrisches Nationalmuseum in Munich has a cabinet with just such lion feet.

One man’s trash is another’s treasure they say.  The market is one thing, art is something else.  Sometimes it is not necessary to spend a fortune to live with a beautiful object that is part of history.

Art Investment

The concept of investing in art received a major boost from Peter Wilson, head of Sotheby’s in the 1970’s, who monetized the art market far beyond anything before.  He is responsible for convincing wealthy collectors that they could buy a work of art and sell it at a  vast profit a few years later.  He is also responsible for convincing the trustees of British Rail to put part of their Pension fund into art.  They finally decided to take a small portion of their fund, 40 million Pounds, and put it into art.  While some sections of the investment came out on the plus side, other’s did not.  Though overall the fund made a profit, In the end, it was said that the fund might have been better off invested in the stock market.

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!

What Was Your First Collection ?

Many years ago I was asked to give a course on collecting at the New School in New York. When I arrived at the school after I had worked months on how I was going to teach my first course, I was told, “You know, if you don’t get more than 15 students the course will be cancelled. “” Wait a minute, you tell me this after all this time!”

Well, to my surprise and delight it was standing room only and there were over 30 students. (I lucked out when they moved us to a larger classroom and it turned out to be the one that had Thomas Hart Benton’s ‘America Today ‘murals (1930-31). These were subsequently purchased by AXA, the insurance company and installed in the lobby of their building at 1290 Sixth Avenue in New York City, where they can be seen today).

To break the ice, I asked how many collectors there were in the class, expecting only a couple of hands to go up. Was I surprised when most of the class raised their hands! I had made the mistake of thinking of collecting only in terms of art. My students were collectors of stamps, baseball cards and even barbed wire.

Most of us start out collecting what our parents collected and then we realize we like better what our grandparents had, or we have our own ideas and go off in a completely different direction. One of our best-known clients began collecting French 18th century furniture as her parents had. She bought a few pieces and then came back to us saying that her friends put their feet up on the furniture so she needed to find other areas of collecting. She bought a Canaletto!

My personal interest had always been photography. I was an amateur photographer, spent long nights in the dark room was co-photo editor for my high school yearbook etc. I loved going to photo exhibitions at the Museum of Modern Art or at the early photography galleries such as the Witkin Gallery.

When I remarried in 1975, my new wife, who I dragged to many photo exhibitions, said, “Why don’t you buy something?” I was totally taken aback. I had never collected anything that was not in my family’s vocabulary, ie something that I had lived with at some time in my formative years.
















Admittedly I was confused. I had already been selling art to collectors for almost a decade and I had been guiding them. But now I needed to apply similar rules to myself. What part of photography did I respond to most? The early years? between the wars? post war? What represented quality in photography? Was a vintage print better than a later one? I felt the former must be better when I applied the rules of some of my fields such as Renaissance sculpture, but I remained unsure. Believe it or not in the 1970’s the image was still considered to be all that mattered. No one thought about vintage prints or investment. Great photos could be had for a few hundred dollars and original prints could even be found for $25.

Coming to the point of a first purchase is a very strange sensation. You become nervous, and worried about making the right decision, but you just have to make the plunge!
















Believe it or not, as I handed over a check to Lee Witkin I realized that my first purchase was a mistake: two famous Edward Western still lives, printed by his son Cole. I should have waited to get vintage prints by the father. Today, my prints are probably worth 10 plus times what I paid for them, but the images printed by Edward Weston himself would be worth a hundred times more. Even more importantly, I would have gotten greater pleasure out of living with them. But I won’t de-accession them. They were my first lesson as a collector in my own right!

What is quality?

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Last week I looked at “What Should I Collect”. So the next obvious question is how do I know that what I am buying is good or, looking at it another way, how do I learn to develop my eye to recognize quality when I see it.

If you have only seen one Monet it will be both the best one you have ever seen and the worst. It is only when you see the second that you begin to discern. You may be reacting to the subject matter or the colors, but comparison between two examples is the beginning of the educational process. Expertise does not come overnight: it is developed through a long process much like mastering a foreign language. Every related work of art that you see adds to your education. This is the essence of developing connoisseurship.

Books (or the internet) are not substitutes for looking at original works of art. They add to your information and give an understanding of what others before you have appreciated in your area of interest. It is important not to take what you read as gospel, but rather add it to your library of knowledge,--all so that you can make up your own mind about what you are looking at.

This allows me to digress for a moment. When you see an exhibition please please do not take the audio guide the first time through. Thirty years ago the chief art critic for the New York Times told me in an incredulous tone that the Metropolitan Museum had encouraged the art writers to use the audio guides for the exhibition that they were previewing. He felt this was insulting. He believed that as a professional he should be able to make up his own mind of what good was and not be led to what the museum thought were the best works of art in the show.

Audio guides are now more sophisticated offering random programming for more of the works of art (but not all) so you can decide where to stop. Still it is counterproductive for you to be told what is important before you have the chance to form your own opinions.

If you are interested in the exhibition, do go through it again (maybe on another day) with the audio guide to amplify or modify your initial reactions. This way you will build your own powers of discernment and you will be the judge as to how well you are being guided by your chosen mentors, be they dealers, curators….or headphones.

It is by honing your personal reactions through viewing, reading, listening and looking some more that you can become a true connoisseur. The process won’t be quick but I can promise you that it will be infinitely rewarding.

What should I collect ?

A question I am asked all the time is “what should I collect?” How can anyone answer that for someone else when the issue is so intensely personal? Nonetheless, I will make some suggestions.

First, go to your local museum. Does anything there turn you on? If so, you may be on your way. Nonetheless, move on to a general art museum in a big city. Give yourself a couple of days to take it all in. Start with an overview, walking through all the galleries. Then decide which galleries you want to return to. What intrigued you, --the familiar or the foreign, ancient or contemporary, American, African, Islamic art, Japanese, Chinese, Old Master, or Impressionist?. If there is a Kunsthalle (an exhibition space) check out the exhibition schedule. Get a listing of all the galleries in town and do a tour.

There are local art associations which may have gallery members who are involved in your specialty. Such an affiliation may add some comfort to your security. A place to start is at http//www.cinoa.org. You can type in a special interest and see a listing from many associations in many countries as well as a listing of their members.

When you find an area that you relate to, seek out an expert, a curator or a dealer, who is willing to guide you. Even though this may seem like an intimidating idea, art professionals who are serious about their field love to talk about it. Someone once said to me that an art gallery is the only place you can walk in, start to ask questions, and the dealer will tell you everything about his business without your paying for the privilege. This was said a very long time ago but for the most part is still true today.

A renowned collector I know told me that, when he was surveying areas to collect, an art dealer put together a reading list for him. He followed it to libraries and specialized book dealers, devouring the latest publications, and out-of-print standards. He was hooked and that reading list gave him a solid foundation on which to build his collection.

Museum curators, like art dealers, look on their work as, in large part, educational. Curators may be less accessible, but museums often have collector groups which offer access and contact with fellow collectors. Remember curators need supporters, and collectors are potential donors. They want you to buy well so that the museum may eventually benefit through your loans or donations.

It comes down to the old Sy Syms advertisement, “An educated consumer is our best customer” be that as collector or museum patron If you show your sincerity in being interested in the art and not just its value, you will be well rewarded by with the most extraordinary personal tutorials.

Over time, collectors often become real experts in their field, having an advantage that goes beyond study,---they have the unique and intimate experience of living with the art.