Ok so the Art Market is down, what are we going to do?
Sotheby’s and Christie’s suffer 75% revenue decline for major art auctions
The sad truth is many Investors over paid for the art they invested in over the past several years. The well-oiled professional marketers at big auction houses created an un-sustainable price bubble that has slowly deflated. In the 80’s it was the Bronze market. Although that market was small in comparison to today’s market, American, specifically western art bronzes were being sold to investor’s, like hotcakes at a pancake breakfast. Perhaps in part because of the Savings and Loan failure of the mid-1980’s investors wanted to raise capital and shed their art investments, and values plummeted for Western Bronzes. More likely investors were convinced by shrewd salespersons that the art they were investing in had more value than it really did. Most of the work sold, never regained value. Even the better artwork suffered in devaluation because of the whole art market scheme of the day. Many of the bronzes sold were re-strikes of retired molds and really did not have the value of the first runs. However, they were represented as the same in many circumstances.
Jumping forward to our current situation the same kinds of misrepresentation and manipulations of the art market has been a standard business practice that has now left the investor holding the bag.
Big Art Big Theft;
The Lawrence B. Salander Indictment
Lawrence B. Salander of O’Reilly Galleries LLC was arrested on a 100 count indictment. Below, is a news release from the New York District Attorney Robert M. Morgenthau about the case?
The indictment outlines how Salander built one of the most powerful art empires on fraud and deceit while he lived life as large as any Wall Street mogul did. Salander’s built an empire built based on illusion and manipulation of those who trusted him. He has pled not guilty to all charges. I predict that if Salander goes to trial that it will be the first time the secret details of how the Big Art Market functions will come to light and we will all learn the truth behind closed doors.
Link to NYC District Attorney Website
Read the Indictment: http://manhattanda.org/whatsnew/press/2009-03-26.shtml
Read the original post:
This is the kind of art market manipulation I am referring to; a market practice that is solely based on the monetary investment value of art. While that may seem like the point of investing to an eager investor that hopes to make money, it is a dangerous approach to investing in art. The Art Market is really a Social Status Investment Market and the dealers work that angle on the crowds at every auction.
Motivated by potentially big profits, investors are often just as motivated by the elevation of their social status because they bought a significant work of art. Does that sound familiar? You the investor go to the big auction and are surrounded by the spectacle of the event, combined with the social evaluation of just being there and a few glasses of wine and the money starts to flow. Ask yourself if you were an objective buyer, investor when you bought that art investment. I suspect that if you answered yourself truthfully and you were objective. You did OK with your investment. If not you may have made an investment mistake. As I have said before you the investor, need to be armed with information. And if the stakes are really high you need to have a trustworthy objective investment advisor before you buy.
As a living artist, I find the current market practices counter productive to my success. Most artists never see the kind of money that is today invested in art. There are the exceptions but they are very few. The more powerful market is the deceased artist market where the artist is now dead and their work has become a commodity. Andy Warhol and Salvador Dali come to mind. Their work is plentiful and has been manipulated to the degree only well-trained experts can tell the difference between a good buy and a bad investment.
What are you suppose to do now that the market has deflated. I hope that you can still afford your purchase. I know many of us today cannot, because what we can afford today declined with the market of yesterday. For many of us we are in an entirely different place economically.
If you can afford to hold onto the artwork you bought and if the work merited the value assigned to it because of it’s artistic or historical significance you will see your investment hold value in the future. If you need to raise cash then you are possibly going to take a loss. If on the other hand you are still buying, there are some fantastic deals today. Use your social network to get together maybe someone you know is selling something you want and you can help each other out of a tight spot.
Consider pawning your artwork for immediate cash. Several dealers out there provide this service. You get the money now and you can keep your artwork providing you can meet the obligations of the pawn agreement when the note is due. Art Capital Group http://www.artcapitalgroup.com/Questions.html provides this high-end service.
Keep in mind they are in business to make money and are not your best friends doing you a favor. So if you go this route pay close attention to the details of any agreement you sign.
Read: The Artist and Debt, Annie Leibovitz Images and Nightmares
My advice is to wait if you can still afford too, to resell your investment.
If you buy art because you love to collect, consider buying more work from living artists. You can build a wonderful collection based on ideas that are more contemporary and live with art you love and for far less risk. You can also get to know the artists and establish a completely new social network of exciting people who you can interact with and own their work. Just imagine the fun you will have if you can get some of your friends to go along with you. You could change the whole market for not only yourself as a collector and investor, but also for the living artists, you support. And if those artists begin to sell, well your early investment will pay off. If you buy from many artists, you will diversify your investments too. But if you buy art that you like, art that is important to you as a person, art that you want in your home so you can live with it, you won’t be to concerned about its potential monetary value. You will be happy.
I am sorry if you were one of the loser’s in today’s art market. Truthfully, we have all lost some measure of our wealth I know I have. I also know that worry and angst over our person finances can create tremendous unhappiness. I also know that being happy at least for me is far more important than money, although it helps. So take a little time now before the New Year and re-think your art investing and ask yourself why you really buy art. If it is just for the money then you can still do very well. If you find you have other motivations that are more personal to you as a human being, and I hope you do. Then think about changing how you buy art and give a struggling artist a step up. It just might pay off big in the end.
Read: The Postman Delivers
For 45 years, the New Yorker’s used Dorothy’s librarian salary for daily expenses and Herbert’s pay as a postman to buy art from then-unknown artists.
The underlying theme: Art collection isn’t only for the rich and élite.
“With very modest salaries, they created one of the most significant contemporary art collections,” Brosius said. “The story has such resonance that anybody can collect art.”
Herbert, 85, and Dorothy, 73, amassed a collection of more than 4,000 pieces.
More on the Postman:
The love of art and a gift for Montclair