IS ART A GOOD INVESTMENT?



There are a number of indicators that prove that Fine Art, carefully selected, can be a lucrative commodity investment. Art is one of the most enticing hard asset investments, as collectors have created a hefty supply and demand system throughout the years.

According to Michael Moses, a retired New York University business school professor who co-

Marc Chagall

created the Mei Moses World All Art Index, over the past 60 years, the total return on fine art has been very similar to the return on the S&P 500-stock index. "If you use the last 30 years, the S&P substantially outperforms art," Moses says. "If you look at the most recent eight [to] 10 years, art has outperformed the S&P."

Another reason to consider investing in Art is that Fine Art has a proven track record as a good choice during hard times. Fine Art is more or less resilient to times of economic turmoil and trouble. It has outperformed during all of the wars of the 20th century, and has outperformed during the last 27 recessions. One of the biggest draws to this asset class is the fact that there is no underlying financial market to tinker with prices. There will never be a bad trade or a flash crash that will suddenly erase the value of your art investment. Though it is not a guarantee, Art also has the potential to appreciate with time.

The last and perhaps most rewarding aspect of collecting Fine Art are the emotional and aesthetic rewards. Because Art is a physical asset class, your investment is something that you can potentially enjoy every day.


COLLECTING THE RIGHT ARTIST

The greatest draw back to investing in fine art is the relative unpredictability of the performance an artist’s body of work might have. Like other markets there are artists and artworks that are highly unlikely to retain or develop future value, and so it is very important as a beginning collector to be highly selective of the artists you collect. The best advice is that you select artists with established markets. A blue-chip artist would have a major following, specifically by academic and museum interest. The Artist is your best indicator for potential value.

Pablo Picasso

Normally a museum artist like Picasso, Warhol, or Hockney would be out of range for the average
collector, but through the limited edition prints market you can attain these artists for a few thousand dollars as opposed to a few million. Many collectors and art dealers will tell you that originals will always perform better than prints, and this is half true. The original paintings for Pablo Picasso or Damien Hirst will always outperform the graphic artworks for these artists certainly, and if you have the capital to invest in high-level paintings of Museum Masters, I strongly recommend that this is the market you seek. However, an original painting by an immerging and unknown artist vs. an establish master’s print will not necessarily hold value or outperform the print. The performance of an original painting depends heavily on the current market and demand for the artist.

COLLECTING THE RIGHT PIECE

Aside from the Artist, other excellent indicators of future potential rest on the work itself. It is true that some compositions are simply more aesthetic than others. Some artworks may bear iconic images and characteristics of an artist’s specific period or style. It can be beneficial to research an artist’s backstory, as it can have a fair amount of weight in the resale value of a piece. Additionally if you are collecting sculptures or original prints the edition sizes can also play a major factor. When deciding what art to buy, the most important is that you enjoy and appreciate the art.