Chapter 10 - Art as Investment
The single most important thing to remember when discussing the subject of investment in art is that no one can ever promise an increase in value. There is no crystal ball to foresee what the value of any work will be in the future.
Does this mean that artwork should never be discussed as a "good investment?" Well, that depends on who you talk to.
There are museum curators, media art critics, and art history scholars—the elitist portion of the art world—who totally debunk art ownership for investment. "One should collect art only for one's intellectual and sensual enjoyment . . . Spiritual enrichment should be the true goal of collecting art."
Okay, tell that to the savvy thirty-something collector who picked up a Jean-Michel Basquiat drawing for a song twenty or so years ago . . .
This collector probably didn't purchase the artwork with the idea of making money, however, like most of us, secretly hoped that the art would prove to be a winner and perhaps skyrocket upward in value over the years. The Basquiat collector liked the art, wanted it in his life and could afford it. The fact that it turned out to be a superb investment was icing on the cake.
The questions you have to ask yourself are: Do you think of art investment as a speculative investment in which you are betting that the artwork will yield a profit in the immediate future? Or, are you concerned with investment as a preservation of capital in which you expect the artwork to maintain its value in the foreseeable future with a potential profit down the road?
If your answer is speculative investment you'd probably be better off investing in the stock market or commodity futures. And presumably you wouldn't be framing a stock certificate and hanging it on the wall. At least then you wouldn't have to look at your mistakes.
What constitutes investment grade art depends on who you talk to. Art dealers and collectors use several buying strategies. Some advise purchasing paintings and prints of established masters such as Rembrandt, Raphael, Vermeer, Renoir, Matisse, Picasso, Chagall, etc. Other experts suggest that you are better off by investing in young emerging artists. You can often find very fine work being created by young, relatively unknown regional artists. Buyers will thus have the opportunity to obtain good value at bargain prices if they invest in the work of exceptional artists before they reach the peak of their career.
Whatever your strategy, most art professionals agree that you should purchase only what you like. If the value goes up, well then you've made an intelligent investment. If it does not, then you and your family can still enjoy the aesthetic pleasure that prompted you to buy the art in the first place. In either case you will still have something valuable to show for your money.
A group of about 250 Old Master painters remain a good investment, but the prices are extremely high. These Old Masters range from the paintings of the Italian Renaissance—Leonardo di Vinci, Botticelli, the Bellinis, Raphael, Titian, Tintoretto, Giorgione, to the brilliant canvases and wood panels of the Flemish and Dutch geniuses—van Eyck, Memling, Bruegel the Elder, Rubens, Rembrandt and Vermeer. Certain French and German engravers and painters, as well as the Spaniards El Greco and Goya, are included.
Keep in mind that a number of these old masters also made prints. These etchings, woodblocks and engravings are still relatively inexpensive despite their extreme rarity. In the opinion of many art dealers and knowledgeable art collectors, these old master prints offer some of the best investment potential in the art market today.
WARNING! Stay away from "restrikes," where the plates have been reworked by someone other than the original artist. If the dealer doesn't know what edition or "state" the impression is from, don't buy it.
French Impressionists such as Renoir, Manet, Monet, Pizzaro, Mary Cassatt, and Post-Impressionists like Cezanne, Van Gogh and Seurat and are extremely valuable in today's art market. Some of these Impressionists also produced a relatively small body of graphic work. These rare, elegant etchings and stone lithographs are, like many of the Old Masters graphics, still relatively affordable.
Twentieth Century Masters
Included are the works of Picasso, Miro, Chagall, Matisse, Jackson Pollack, and even Andy Warhol and command especially high prices. However, the investor must be careful when it comes to acquiring Modern Art. The art movement known as "Modern Art" has often been lacking in direction and quite vulnerable to the influence of well-orchestrated promotional campaigns. Skyrocketing prices into the millions for still-living artists are always in danger of market corrections.
WARNING! Don't buy with your ears instead of your eyes. Purchasing trendy art is usually like investing in penny stocks—it's a dangerous game.
Traditional, Regional, 20th Century Realism and Western American art is just now beginning to attain its own national significance. A substantial portion of all American art is sold here in the United States. In comparison, only about a fifth of French art is sold in France. The educated guess of many in the art world is that within the next ten years American Art will become internationalized, broadening the market and rewarding early collectors.
Price up-trends have been very evident in prints. Recently, a Rembrandt etching fetched over a million dollars at auction. Many artists from the Old Masters to the Contemporaries approached printmaking as a challenging art form, equal in significance to their painting, drawing, or sculpting.
Remember, just as you would with any investment, "buy low, sell high" still holds true. That's easy to say and much harder to do but here's a tip. The closer you get to an artist's "stomping grounds" the larger the collector base will be resulting in greater demand. This often means higher prices. When selling, you may wish to focus on an area close to the artist's home base. Conversely, when buying, you might look further afield where the artist is less well known, thus the demand is less and the prices lower.
Obviously, to realize a profit you have to sell your investment. But what if there is a market turn-down? After all, the art market is subject to ups and downs just like the stock market.
The answer is: buy something you love and can afford. If you are sure of the work's quality, have checked its provenance and authenticity, and are happy living with it, no worries. You can ride out the downturn and wait for a more opportune time to sell.
With all this discussion of art as investment it is important not to lose sight of the true value of fine art. Art is about beauty, passion, drama, memory and other intangibles. You should always buy a work of art because of how it makes you feel, and on a personal level, what it means to you.