Investing in Art

http://the-easel.com/essays/for-love-or-money-the-merits-of-investing-in-art/

by magda_wang • 7 years ago

44 16 7 years ago

Insider trading and conflicts of interest are uncontrolled in this market. The major shows of works of an artist are scheduled long before they are publicly announced. These shows usually increase the value of works by the artists selected. The big donors to the museums that hold the shows are the kind of people who enjoy and buy art and wind up sitting on their boards. It would be bad enough if they steered the museums to schedule shows of the artists whose works they hold, but even if they do not hold any, they may have months of insider knowledge of future shows during which they can acquire some such works before the show is publicly announced and the market prices of the works rise.

pradn• 7 years ago

There are now companies like Masterworks that let you crowd-fund the purchase of million-dollar artworks. Problem is that the fees are 1.5% a year and 20% of profits and your gain will be realized when they decide to sell at some point in the future.

It would be good to a Vanguard-like trust owned by investors where the trust invests in well-known types of art - a trust for Impressionists, and a trust for Baroque, for example. I'd perhaps invest in an art ETF that's traded on the public market and owned hundreds of works. It's just not clear what should be bought and when they should be sold.

https://www.masterworks.io

otoburb• 7 years ago

>It's just not clear what should be bought and when they should be sold.

Maybe this will be an incentive for shareholder voting to come back into vogue.

envoked• 7 years ago

Shameless plug:

If you're interested in the art market and factors which affect price/value, I work for Arthena (YC W17) and we're hiring for a variety of roles. If you're interested check out https://angel.co/arthena or reach out to me directly: adrian@arthena.com

ccffph• 7 years ago

Hey Adrian, I've recently been looking into this area and stumbled upon your site only several weeks ago. I was wondering if musical instruments would fit into the "art" investment category as well, or is it a separate asset class? Stradivarius/Cremona violins, Steinway pianos, etc. Would rare musical instruments yield similar returns on average?

RickJWagner• 7 years ago

I'd love to make moderate investments in art. The problem is I'm a prime candidate for over-pricing, forgery, etc. Basically I have no idea how to validate or value a piece of work.

So I guess I'll stick to the safe cheap stuff.

yitchelle2• 7 years ago

Not to sound too cynical, but I am wondering how over-pricing can be a problem when the price for a piece of art is however much someone is willing to pay for it?

tempguy9999• 7 years ago

Further, if there is any measurable value to much art other than how much someone pays for it? Which is seemingly driven by hype, not any intrinsic worth such as beauty/utility.

For example, anyone going through Gloucester Road tube station in London might wonder if the platform 'art' there does anything noteworthy but hide the brickwork behind.

TheOtherHobbes• 7 years ago

Art has no direct utility value. But there is a definite - if approximate - consensus value based on the reputation and history of an artist and the location of a work in their output.

This is often multiplied by speculative hope/greed, which can be manipulated in ways that have nothing to do with any consensus about artistic value or historical interest.

Galleries and collectors are not unfamiliar with the art world's equivalent of pump 'n dump. More direct methods may also be used:

https://www.cnbc.com/2018/08/16/think-you-can-spot-a-fraud-t...

RandomBacon2• 7 years ago

I'm curious, does anyone here invest in books (or trade in rare books in order to get the books they want)?

OisinMoran• 7 years ago

Perhaps not exactly what you are asking, but my grandfather collected antiquarian books. It was quite the collection and even had a first edition of Alice in Wonderland with beautiful colour plate illustrations and one book that looked like it had been signed by Queen Victoria. My mother had previously sold a miniscule little book of (I think) Patrick Kavanagh's poems for around £1000 or £2000, but had opted not to sell the Lewis Carroll because it was so beautiful.

So one summer, many years ago, she tasked me with valuing and selling off some of the rest of these books that had just been collecting dust under their bed and I hopped online to sites like Abe Books, made a little spreadsheet, then set off with a rucksack of what I thought was around €1000 worth of books. Now, as I was quite young and unemployed this seemed like a lot of money.

Alas, my first few trips to various bookshops specialising in this very thing were all futile. I eventually managed to sell a few but for much less than I thought, and to get anything reasonable I ended up having to part with the Alice in Wonderland. Thankfully I read it before.

This is all to say I would not recommend investing in books. They take up a lot of space, gather dust, are not particularly liquid, and most won't even appreciate and you've got to be careful not to damage the ones that will. Anything less interesting than a signed first edition by a renowned author will barely even get a second glance.

RandomBacon2• 7 years ago

Thank you for sharing your experience. Your last paragraph does make sense.

badpun• 7 years ago

Tangentally, I don't think "investing" is the right term here. When you invest in something, you buy/create an asset (like a machine, or stocks in company) that is creating returns. Meanwhile, buying assets that don't create returns, with the hope of selling them for more later, is just speculation, not investing.

Investing in Art

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