Since several decades, art is seen in financial circles as an important investment instrument .
Our film industry is producing some high-end investors in fine art:
Steve Martin: Picasso, Georgia O’Keefe, Roy Lichtenstein
Steven Spielberg: Norman Rockwell
Elton John: Damien Hirst, Picasso, Francis Bacon, Andy Warhol, Jean-Michel Basquiat, Matisse
Brad Pitt and Angelina Jolie: Banksy
Oprah Winfrey: Faith Ringgold
Madonna: Frida Kahlo, Damien Hirst, Picasso
Elizabeth Taylor: Van Gogh
Gianni Versace: Roy Lichtenstein, Andy Warhol, Jean-Michel Basquiat
David Bowie: Balthus, Rubens, Tintoretto
The most famous story is Eric Clapton investment. In 10 years, Clapton made a return of 975% on his investments. He is known to appreciate abstract artist Gerhard Richter. He recently pocketed $ 55 million on selling 2 of the 3 paintings he bought for $ 3.5 million in 2001.
But this is one side of the story, and there is also another side: the untold story.
About wrong choices of buys in Galleries or from dealers:
there are millions of stories people don't speak about, often out of embarrassment, sometimes for financial reasons, IRS problems, or for multiple purposes.
A Hollywood movie producer bought 20 years ago ten gouaches by Erte for $ 750,000. A couple of years ago, he asked me to make an evaluation of his Erte collection in his museum. When I showed the results in auctions for similar gouaches, I thought he was going to kill me when I told him they were worth $ 50,000.
The truth is, many people are overpaying fine art out of vanity, pride, and stupidity or are the victims of unscrupulous art dealers and galleries.
Is it advisable to invest in fine art?
There are two possible attitudes for an art investor to adopt.
1/ short-term return on investment
2/ long-term return investment
Short-term investment
Making a quick profit is possible.
But this type of art will not be found in an auction house or a gallery. In both places, professionals surround you. In galleries, owners know what they have in their hands. In auctions houses, every object is scrutinized by thousands of specialists. So it is complicated to find that unique moneymaker artwork because many are having the same goal as you. But again, there are exceptions.
I worked for many years for Charles Bailly of the gallery of the same name in Paris. Experts like Charles Bailly are very rare. He bought in February an Old master in Sotheby’s New York for $ 2 million and sold the same painting for $ 22 million in November the same year in Sotheby’s London.
In 1989, he bought a painting, mentioned in a Parisian auction as a school of Velasquez, estimated in the auction catalog $ 50,00, for $ 5 million at the hammer after a long battle with a representative of the Louvre Museum. Buying an artwork a 100 fold of the estimated value is not given to everybody.
Charles Bailly is a genius and is recognized as is by all his pairs ( who aren’t jealous of him, of course).
That day was the only day ever I saw Charles Bailly, expressing without retinue his joy in public and claiming he just bought a real Velasquez, executes at the begin of his career. For a return in the short term, you need to find artworks in estates sales, buying artworks directly from artists, or their heirs, in isolated areas, etc. In reality, you will find valuable artwork in locations where our modern communication instruments aren’t present.
The Internet is an enormous source of information and communication available to most people, but not to all of them. Cuba is one of these countries where the internet is not present everywhere.
Not everybody has a computer.
Long-term investment.
In my opinion, it makes much more sense to consider an investment in fine art as a long-term investment.
Art is an illiquid asset. If you buy a painting today, it is not to sell it next week, unlikely, as you would buy stocks today and sell them in 2 weeks.
The return on investment will depend on several factors:
- The artists you invested in
- The quality of the work in comparison with other works by the same artist
- The period the artist made the painting.
- The size
- The state of conservation
- The rarity
For example, a Picasso 24” X 36” from the Blue period will be at least 10x more expensive than a Picasso 60” x 36” he made after 1958.
It is advised to buy upcoming artists. Artists with publications about their work, with at least ten years of exhibitions on their CV, are usually perfect verification systems to decide to invest in them.
Investing in upcoming artists is going to be cheaper than to invest in known artists, and available to a larger spectrum of people.
to be continued
