Is the Art Market a Safe Haven for Your Money 2.0?

Posted on March 1, 2011

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Is the Art Market a Safe Haven for Your Money 2.0?

worms, digital-montage by david eubank 2008

 

Art Daily reports that Sotheby’s posted its best earnings in 267 years in 2010.

2010 brought the best financial results for Sotheby’s in its 267-year history, apart from 2007. Consolidated Sales* were $2.0 billion in the fourth quarter and $4.8 billion in the year, an increase of 57% and 74%, respectively. Reports artdaily.org

So is the Art Market Right for YOU and Your Money?

Answer: Maybe, Maybe Not!

You see it all depends on what you can afford to buy? It also depends on what you can afford to lock up into a long term investment? Because when you buy Art you just might have to wait to make a profit. Some art works are as liquid a commodity as gold, maybe even better. The process of selling art does involve a little more theater than selling gold, if you trade through art auctions. It is far more elegant way to trade commodities.

I use the word commodity to describe art sold on the high end market today because that is exactly what those great works of art have become. This is not to imply that these select specimen’s of art are not great artworks, they are. The elite art market has transformed these great art treasures into a collectable commodity that really only the wealthiest among us can actively collect.

As an artist if your work makes it into this category then you are a collectible commodity. Buying and selling art is really a different business than art for its own sake. But then, money is the first material all great artists need to continue working. The trade off is successful trading in the art commodities market. Once an artists work reaches a point of sustained production and sales it begins to make the transition. Many works today hold their value because the artists are quite dead and are no longer adding to their production. It is a simple supply and demand economics.

However for artists like myself I am not ready to commit suicide to improve sales just yet! It would seem many others aren’t to eager to take that road either and their work is selling pretty well.

Check out Contemporary Evening Art Sales Results February 15, 2011, at

http://www.sothebys.com/

What does all this mean to you the Art Collector?

First let me assume you are a New or Emerging Collector. I assume this because you are reading this post? If not and you are a Mature art Collector you still might find this information helpful. Let me also say that I approach collecting from a very particle point of view. As an Artist and former Art Museum Director/Curator I only personally collect art that I love or is made by artists that I love. Most of the time those two criteria work in concert and I have a collection that is first personal, one I enjoy living with, rather than one centered on investment. If I could buy more expensive works by more famous artists I would still use this criteria as my guide. For me art improves my quality of life and if I were more wealthy that would be my first goal. Improve my quality of life. Living with original art really does improve ones life experience.

UCMSnakes in that pit?

I do and so should you! Don’t let the passion of the moment cloud your judgement when considering to buy a work of art. That is exactly what happens at Art Auctions. Don’t drink the Champaign until after the sale. Before you attend an Auction set your buying limits and stick too them. Know what you intend to buy and know what your buying. Do your research before the auction?

Pawn Stars verses Antique’s Road Show

That’s right pilgrim, educate yourself. If you watch the Antiques Road Show and dream big dreams of protecting or finding wealth change the channel and watch Pawn Stars. Rick Harrison Pawn Broker and Pawn Star has some sound collecting advice for you. I love the show because in every episode someone brings in a collectible treasure, treasures of all kinds from rare historic antiques to fine art. Rick is quick to teach, all that glitters is not gold? Rick also teaches that the experts know a lot more than well the experts. You see it depends on the expert and who that expert is representing. Rick is an expert buyer and collector but he knows when he needs a specific expert an objective expert opinion. Rick knows about pit snakes and how to avoid them. So should you. Information is your only weapon in defense of your money.

Never forget the sellers probably know more than you do about what your buying, well unless you collect at Garage Sales. Rick is a shrewd seller as well as a skilled buyer. He is very upfront with any seller, he is in business to make money. He knows what it will take for him to sell your verified treasure and so do the art auctioneer’s. That is why art is not always a liquid asset. It is also why art prices fluctuate. Supply and Demand!

So how can you get into this Art Investment Trading Game?

First do a lot of research. Learn about the art market, learn about where you fit or better said what you can afford?

Develop a relationship with a trustworthy galley? Remember not all galleries or art dealers are trustworthy. Read Lawrence B Salander is Going to Jail

This is my most important advice

Identify what you are interested in, that means what kind of art do you like? The market represents every historic period, style and movement in the history of the world? So where and what is your passion. Collect your passion or passions? Collect art you want to live with and enjoy everyday. Collect art you look forward to seeing when you wake up or when you look up from your computer at work. Let your collection be a reflection of you and your interests. That may be an interest in the artist themselves. This is especially true if you collect art work created by artists in your community, artist that you can develop a relationship with. This can also be accomplished through the galleries that represent an artist your interested in? Now I am not talking about becoming best friends with a particular artist, I am talking more about a professional or intellectual relationship. But you just might become friends?

Read: Herbert and Dorothy Vogel are among the most famous of contemporary art collectors in the United States, but not for the usual reasons.

I just love this story and I love Herbert and Dorothy Vogel because they really get it! They collected out of love and in return they built a collection that is second to none. Through their investments, modest investments in living artists, they developed relationships that paid off a hundred fold. Now they are donating their world class contemporary art collection to well everybody. I would also add that the collection is worth a fortune, but for the Vogel’s it is about the love of art not the money. They want to find a good home for their loved ones, their collection. If you can accomplish the same? You will have created real wealth in your life.

Art Auctions or Snake Pits

It is not that I don’t like Art Auctions, I do, well not all, maybe I like some more than others and I am prejudice or perhaps pessimistically skeptical. Yep that’s right I don’t like snakes of any stripe. Some squeeze you, some just bite you and some are just plain deadly! Like all wildlife snake handling requires a keen understanding of snakes as a whole and sharp vigilance as a defense to protect yourself if they strike without warning. Although most snakes exhibit warning signs before they bite or squeeze. Some snakes are hypnotic and can put you in a trance so you don’t even know they are about to eat you. When you wake up in the snakes belly it’s too late.

Art Auctions come in all sizes and shapes, you may have already attended an art auction at your favorite nonprofit art organization. These auctions are designed to raise funds for the organization. They are in most cases on the level. Most of the art is donated to the auction by artists themselves or members wanting to contribute to the organization. These are good entry level auctions for the emerging collector. You get some nice art. You build some relationships with the artists and the organization and you contribute your support. Where these auctions turn into viper pits is when you begin to see artworks placed in the auction by dealers and or galleries. Now I can’t make a blanket statement and say this is always bad but it should raise some awareness that you need to do some further investigation before you bid and buy. If these specific works seem to be priced higher, the reserve prices, than the majority of other artwork in the auction you might get squeezed.

The professional Art Auction. This is where dealers and collectors buy and sell commodities that just happen to be works of Art. Do your research about the auction and the host? Sotheby’s and Christie’s among others are good places to engage this kind of trading. All big auction houses not only sell at the top but sell closer to the bottom of the market too! Many like Sotheby’s offer the buyer exceptional information, they do the research and they stand by their results. For example they authenticate the Artworks so you don’t buy a fake and there are fakes out there. They also authenticate ownership, provenance. That is the history of an Artwork, its origin, ownership and sales history.  After all you don’t want to buy a stolen or misrepresented work of art as an investment. These are important pieces of information at whatever level you collect or invest. They will make your investment less risky. When you sell your buyer will want to know that information.

A good place to start researching is at the big auction houses themselves. Today most have very impressive websites that you can browse and research at your leisure. Look at past catalogues and sales. These are wonderful teaching tools and you can learn a lot about art and art history using these resources. You can research specific artists and the trends in the sale of their artworks. You can also sign up for publications and buy catalogues which are in themselves collectible and wonderful resources that have amazing pictures of pictures or art.  http://www.sothebys.com/

Online Art Auctions

Just say No? I do not advocate bidding on line unless you know the auction house. All the major auction houses have online bidding but you need to be talking too a real person before you engage in bidding wars over the internet. It is hard enough to navigate this very complex investment activity without adding more unknowns to the risk. If you are dealing with a Sotheby’s or another auction house of the same quality then you may do just fine. But know what your buying and be sure of who your buying from. Remember provenance provenance provenance provenance

Above all make your collecting a part of your life you enjoy and make your collection part of your life. You won’t go wrong, well if your careful. Remember the Hypnotic Factor of Snakes!

 

Sotheby’s One of the world’s most prominent auction houses. They provide art collectors with a wide range of services, including trusts, estates and appraisals, plus presenting major art and antique auctions throughout the world.

Christie’s has offices in 32 countries and sale rooms in major cities around the world.

Phillips de Pury specializes in the sale of Contemporary and American Art, Jewelry, 20-21st Century Design, and Photographs. The firm also focuses on private treaty sales with particular emphasis on Impressionist, Modern & Contemporary art through de Pury & Luxembourg Art in Geneva and the de Pury & Luxembourg Gallery in Zurich. Phillips conducts auctions in New York, Geneva and Zurich.

Los Angeles Modern Auctions (LAMA) is the first auction house to specialize in Modern Art, Design and Furniture with an emphasis on works by important 20th century artists, designers, and architects.

 

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