Friday, November 4, 2011

Is art an investment? (A series in 6 parts)


Part V – Speculation in art


Raw speculation in art is blind man's buff. There is no hard valuation, neither a market exchange nor regulator, as in shares or bulk commodities

An artist invariably begins his career selling on a cost-plus basis until informed collectors and critics assign significance to this artist's contribution to a style, school or genre and the work begins to command a premium. Demand-supply factors nominally correct this price.


To cite an example, Bonham's in England once raised big money at an auction of FN Souza's drawings. But that auction was exclusively of drawings during his London tenure, long ago, which are in special demand. That would not mean that any FN Souza drawing would fetch you the same premium overnight. Likewise, if a chunk of our grand old masters' lifetime work fetched the much-hyped crore- the painting in question was most probably composed three decades ago, part of a very limited series and sold at four-digit rupees then. While some collector in the chain possibly paid a fortune and recovered it from the auction house, the painter continues a respectable upper-middle-class existence.



Sure, there would be a rub-off on other works in that series by this artist, also on his other works, but the extent is certainly not predictable. So, if there is a 3 or 4 digit long-term profit in art as investment, there is this risk too!!


Ideally, if one is looking for a long term appreciation of a work of art – he must first have a basic knowledge of the field that he would like to dabble in. He should clearly understand that scores of works along a theme or along several visualisations evolve a unique style and discipline. With time and more experience that style points to a way of thinking about the visualised subjects, often a philosophy conforming to a body of artists in an institution, or even across countries. With more maturity, that artist contributes to that style or school and thus gains from his work being correlated to more established artists and their valuations, sometimes across the planet from us. In rare cases of brilliance, critics and historians perceive one artist's work as schools by themselves. This perhaps explains why the expert art valuator working for a foreign institutional buyer like Christie's or Sotheby's offers large sums of money for a painting by our veterans. It takes a very well informed, mature and experienced critic and valuator to correlate a given work in conformity to an established genre of masters, and risk buying it at such a large sum. Here, it pays to take good counsel from a qualified art historian and critic.


We cannot deny that some canvases command serious money and this makes them as valuable as stock market blue chips


But the bottom line is that an organised study is vital to determine the investment value of a work of art. One cannot speak of art investment just because one has a few lakhs stashed away and wants to institute them in a profitable portfolio.






14 comments:

  1. Recession and then Boom. We in Ireland are going through a recession as is the rest of the Euro. In a recession artists have to be competitive and price their art works accordingly to suit the demand until the markets return to stability. The person who buys in a recession at the low price gains when the recession is over and prices go up. Buying art in a recession makes sense.
    Posted by gerard on linkedin Group: Contemporary Art

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  2. Modern Paintings HEADS Series: www.blurb.com/bookstore/detail/2153386
    Posted by Leon Nicholas on linkedin Group: Visual Artists and their Advocates.

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  3. I collect for my own enjoyment. I am not wealthy but I have over 200 pieces of art. I have spent $30,000 or there about on conservation. I have only traded pieces from my collection, but have not sold anything. Eventually, because of age, I will have to deaccess my collection and that requires me to understand it's value. Auction results and current gallery prices help to identify trends, subject, style, quality issues, provenance, age, etc that seem to underlie value. But those considerations did not greatly influence my original purchase.
    Posted by Jerry on linkedin Group: Art Collecting Network.

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  4. Yes, Art is an investment in time.... the artist took the time to create, while you, the investor will spend time appreciating the piece you purchase. In essence, each art piece is captured time and emotion.
    Posted by Sharon on linkedin Group: International ARTS & CRAFTS Network.

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  5. In my little fish bowl I'm starting to be a moderate sized fish. People buy my limited Edition prints from my oil paintings. Lots of folks have read articles on the internet that tell them buying a limited Edition print is a good investment....yes well... I try to un-educate them and give them the larger picture. I tell them that first of all, I'm not a well known artist and they are betting that someday I will be famous when they buy a limited edition. If I never make it to fame before I die they will have wasted some of their extra money...not all my LE prints are a step in quality. Something has to make me famous otherwise you have a limited edition print from a nobody. No fame, no gain. I only have so many years left and I don't want to rip people off, but if they want to pay more, then that's up to them. I do print my limited editions on canvas ciglee and keep track of the names and numbers. But there are thousands of little known artists like myself and the chances of fame are slim though not impossible. I always feel obligated to those who believe in me to do better. Russell Lee Hansen
    Posted by Russell on linkedin Group: fine art professionals & collectors.

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  6. So is real estate, the diamond market etc. The art market has an established index already (all right, not a widely recognized one, but still it is something), and a very acceptable liquidity, whenever the relevant auction events are scheduled. Not bad at all.
    Posted by Aias-Theodoros on linkedin Group: The Art Collector Network.

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  7. Art is an investment if you buy the work of established artists such as Jim Dine,Stella,
    Rauchenberg etc. There is a market exchange established by the last auction price worldwide. If you are lucky enough to buy an unknown artists work that increases in value in time. Good for you.
    Posted by Bernice on linkedin Group: Art n Soul Inc.- Creating Opportunities for Artists.

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  8. Yes it is a good investment , however how long will have to hold the investment.
    Posted by Gene on linkedin Group: The Art Collector Network.

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  9. Maybe for a whole market cycle, which is a non-stable, non-predictable parameter. Investment in art is very much like real estate: Not a quick one, with the difference that it is more liquid. The difference from the stock market is, that there is no crier to tell you everyday the actual price of your investment. You also have to like it yourself. It's an investment and a consumer's good at the same time.
    Posted by Aias-Theodoros on linkedin Group: The Art Collector Network.

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  10. I think that most people buy art because they love it, love living with it and may well pass it on to their heirs. The "art market" is specialized with the super top end concentrating on selling to the super rich and creating an "art history" that eludes to it being a good investment. However, times and tastes change so what's hot for one generation may not continue into the next, or next. The legacy of art depends on those who cherish it. Van Gogh comes to us today because of the dedication of Theo's widow and son. A trip to the Van Gogh Museum has a plaque attesting to that fact. Joanna, Theo's widow's father wanted her to destroy Van Gogh's canvases and sell the stretcher wood. Hmmm. Beauty is in the eye of the beholder. Those cave paintings can't be bought and still resonate in our hearts, eyes, and minds.
    Posted by Suzanne on linkedin Group: The Art Collector Network.

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  11. Art as an investment depends also on where you are in your life-cycle as a collector. I always tell my clients to buy what you love or stimulates you, but think about the disposition of the work of art or your entire collection - for you or for your estate. Buying works by artists that will eventually come to auction is a good investment overall. All best, Geri Thomas, President, Thomas & Associates, Inc.
    Posted by Geri on linkedin Group: The Art Collector Network.

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  12. I agree with Suzanne that most people buy on trips or vacation something that they like , usually not very good. i have spent a lot of time and energy upgrading the works bought on impulse by some of my clients. I tell my clients that if they like something and can afford to throw away the money buy it other wise my system is to invite them to Art fairs such as the Armory on Park Avenue give them a pencil and paper and tell them just go around and make a list of everything that you like and then we will decide what you should buy.
    it works.
    Posted by Nahid on linkedin Group: The Art Collector Network.

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  13. It is rather easy to prove today that wisely buying high end quality Asian ancient art is not only far better than wasting money in banks, but also it gives a satisfaction level that no bank to that day will ever be able to match. So, in a few words: do it!
    Posted by Pascal on linkedin Group: The Art Collector Network.

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  14. I think many people do indeed love Asia's ancient art. For myself, I often use images from the cultures of Japan, Korea, and especially India in my monoprints with Chine colle. I've been very successful with them. Iinterestingly though, when India first got the A bomb, those sales fell off. Recently I did a series employing images from the golden age of Greece, and with that country's present doldrums, very few have actually sold to date. So sentiment is also effected by world events. I am however an artist for the long run so I suppose that Greece will recover and its ancient art become as beloved as ever.
    Posted by Suzanne on linkedin Group: The Art Collector Network.

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