|Jeff Koons, Cracked Egg (Red), 2008|
Fine Art has been an attractive investment for centuries and is becoming increasingly recognized as it has outperformed more conservative investments over the last few decades. It is an alternative investment earning capital gains rather than a dividend.
Indeed, for the last ten years, the price index of all Fine Art works sold more than once worldwide has produced a nearly 11% annualized return, outperforming the Standard & Poor’s 500 index of large cap stocks and most other asset classes, including bonds and commodities.
|Marc Chagall, Multiflore, 1974|
Since the end of World War II the value of Fine Art works has appreciated enormously. Quality works of art have proved to be a remarkable store of value. This is predominantly due to increasing rarity caused by an expanding demand from museums and collectors, and dwindling supplies.
Before you even think about putting down money, however, it’s important to educate yourself on the forces affecting the art market overall. The best advice is to talk to seasoned collectors and professionals in the industry. Go to the galleries and ask questions. Get involved with the museum and befriend the curator. An educated consumer is going to be best equipped to maneuver in this marketplace.
If, as it is more likely the case, you want to invest your money in something that you also like the look of,
(which I recommend!), make sure that your heart doesn’t rule your head and you buy something that looks pretty but is unlikely to ever accrue in value or worse yet decrease.
On that note, beware of galleries and dealers promoting artists with niche bubble markets. There is a reason we have not seen some very “popular” commercial artists in any major Contemporary Museums – the following of these types of artists is purely promotional, and their value is backed by the people marketing them, not by an actual global market. Over time these types of mega-marketed commercial artists will fall victim to the tastes of the market and will be virtually worthless.
|Jim Dine, Fortress of the Heart, 1981-82|
|Picasso Linocuts featured at the MOMA 2009|