Artprice 2019 Annual Art Market Report

The 2019 Artprice Annual Art Market Report is out, and according to a review by Yahoo the market shows growth in transactions and confidence. The report contains a lot of good information for art market trends and analysis for appraisal reports.

Yahoo reports with links to the full report
PARIS, Feb. 21, 2020 /PRNewswire/ -- Artprice by Artmarket's 2019 Annual Art Market Report shows continued growth with a all-time record number of transactions based on global confidence in the market, and the French market was particularly strong in 2019.

Fruit of the alliance between Artprice by Artmarket.com, world leader in Art Market information (founded and directed by thierry Ehrmann), and Artron, its powerful Chinese institutional partner (directed by Wan Jie), our 22nd Annual Art Market Report allows a global view of public Fine Art sales of paintings, sculptures, drawings, photography, prints and installations from 1 January 2019 to 31 December 2019.

thierry Ehrmann: "Today's Art Market is exceptionally mature, capable of withstanding political instabilities, as both London and Hong Kong's results have shown. China, which hardly existed on the global Art Market in 2000, now generates almost a third of its total value."

22nd Annual Report by Artprice by Artmarket

This report contains the famous Artprice ranking of the Top 500 best-selling artists on the global fine art auction market and the Top 100 auction results. It also contains an analysis of the global Art Market from a geographical perspective (by country and by major city), a breakdown by historical periods and by artistic media, a selection of crucial Artprice market indices and 8 key chapters providing an uncompromising analysis of today's global Art Market. No other entity is currently capable of generating such high quality macro- and micro-economic metadata based on proprietary Big Data and AI algorithms.

This 22nd Annual Report on the Global Art Market is distributed worldwide exclusively by Artprice by ArtMarket and Cision, which together have created the first international press agency dedicated to Art Market information: Artpress agency®, which belongs to Artmarket.com, is the global leader in art market information.

Read this 22nd Global Annual Art Market Report for free:

Confident and stable growth, with a record number of transactions worldwide

The Art market has continued to deepen with a record 550,000 fine art lots sold via auctions around the world in 2019, generating a total of $13.3 billion. This was the highest annual number of lots sold since 1945… creating the deepest and broadest public art market ever recorded.

Driven by a healthy combination of investment logic, speculative buying, passion collecting and insatiable demand for major signatures from the world's new museums, the global Art Market posted a buoyant level of activity in 2019 with a record number of 550,000 transactions worldwide.

The drivers of this growth are ease of access to Art Market information, electronic sales (99% of the market's participants are connected to the Internet) - the financialization of the market, a growing population of ever-younger art consumers (from 500,000 after WWII to 120 million in 2019) and the extension of the market to the entire Asia/Pacific area, plus India, South Africa, the Middle East and South America.

In terms of turnover, the global Art Market posted a contraction of -14% mainly due to a dearth of masterpieces above the $50 million threshold; however, the unsold rate remained perfectly stable at 38%, as did the overall art price index, which only changed +0.48%.

Remember the "unsold rate" has been closely watched for 120 years as it quickly indicates when a market is moving into speculative mode (below 20%) or into a meltdown of confidence mode (over 60%). According to the famous Art Market sociologist Raymonde Moulin, the current rate of 38% is close to the "ideal" unsold rate.

The strength of the Art Market is related to its unparalleled level of selectivity, very much reflecting Artprice's dictum "Buy the right work, from the right period, with a good story, by the right artist, at the right time."

Over 20 years, the Art Market has experienced very substantial growth

An efficient, liquid and transparent Art Market that resembles financial markets.

In a world where many countries are posting quarterly economic growth rates well below 1%, the Art Market has once again confirmed its efficiency, liquidity and transparency... just like a financial market. The key growth figure bear witness to this evolution:

- the Art Market's total auction turnover has grown fourfold since 2000, from $3.2 billion to $13.3 billion in 2019

- the number of lots sold has doubled over the same period from 272,000 lots sold in 2000 to 550,000 sold in 2019.

Our Artprice100® (a global index covering all historical periods of creation combined: i.e. Old Masters, the Modern period and the Post-War/Contemporary periods) showed a +396% increase in value between 1 January 2000 and 31 December 2019.

While the Central Banks – and notably the ECB – are maintaining close to zero or even negative base interest rates, the Art Market is posting frankly insolent health and our Artprice100® virtual index (covering all historical periods of creation combined) is currently posting a +396% increase since 2000.

The Internet (Microsoft estimates over 6.3 billion people are connected worldwide) has now become the principal and definitive forum for auction operators worldwide and they are using it to consolidate their market shares on all continents. Of the world's 6,300 auction houses, 99% are today present on the Internet (versus just 3% in 2005).

France joins the quartet of major Art Market powers

France posted the best performance in its auction history, raising its auction turnover +18%. With a total of $830 million in 2019, it substantially upgraded its fourth place in the ranking of major Art Market powers. However, it still has a long way to catch up with the 3rd-placed UK, which posted an annual auction turnover total on fine art 2.5 times higher.

thierry Ehrmann: "If Eric Turquin's Caravaggio had sold at auction, as planned, and not privately two days before its scheduled auction in Toulouse, France's annual turnover total would have been close to $1 billion in 2019."

Nevertheless, France's fine art auction strength is essentially its core high-volume backbone. With 82,000 fine art lots sold in 2019, France represented the second largest market in the world, behind the United States (99,000 lots sold), but ahead of the UK (70,000) and China (66,000).

France can today congratulate itself on having the strongest auction house in Europe: Artcurial, which now ranks 11th in the world by annual turnover.

General overview of 2019

The global Art Market generated $13.32 billion, down -14% mainly due to a drop in the number of ultra-high value masterpieces offered (worth > $50 million)

The number of lots sold worldwide reached a new historical high of 550,000

The average lot price in 2019 reached $24,300

The median lot price was $940

Approximately 90% of all lots sold fetched less than $17,000

The unsold rate remained stable at 38% (slightly more than a third)

The overall price index remained stable at +0.48%

The Contemporary art price index was up +4.44%

Financial performances

Repeat sales* show an average annual return varying between +5.5% and +8.2% since 2000

Works purchased between $200,000 and $1 million generate the strongest annual return: +8.2% since 2000

* The same work bought at auction and sold at auction in 2019

Soft Power

The United States ($4.6 billion) outperformed China ($4.1 billion) and the UK ($2.2 billion)

China suffered a milder correction (-9%) than the United States (-22%) and the UK (-21%)

The top three powers on the Art Market accounted for 82% of global fine art auction turnover

France was the only major power to post positive growth: +18%

Auction houses

Christie's and Sotheby's together hammered 54% of the global art auction market: $3.65 billion and $3.59 billion respectively

Five Chinese auction houses ranked in the Top 10 worldwide

Phillips confirmed its excellent 2018 results with its second best-ever annual total, despite an -11% contraction

Artcurial ranked 11th in the world becoming the leading European auction house

Artists and record results

In 2019 there was only one auction result above $100 million (compared with two in 2018).

Claude Monet's Haystacks (Meules) (1890) peaked the market at $110.7 million.

Its value was multiplied by 44 since its previous auction in 1986.

Claude Monet arrived second in the general classification by annual auction turnover, below Pablo Picasso and above Zao Wou-Ki.

Jeff Koons recovered the title of "most valued living artist in the world" when his Rabbit (1986) fetched $91.1 million

Gerhard Richter and David Hockney were the world's best-selling living artists, each with annual totals of $130 million in 2019.

Three main trends

1. Street Art is increasingly present on auction podiums, with its own stars: Kaws and Banksy. Lots of other street artists are moving up the sales rankings including Invader, Stik, Shepard Fairey and Vhils.

2. African-American and African-origin artists are recovering their rightful places in art history and in the market. Kerry James Marshall climbed to 55th place in Artprice's general ranking.

3. Christie's HI-LITE sale in Hong Kong put a name on the first major art movement of the 21st century.

The Museum Industry® is a global economic reality in the 21st century that represents the driving force behind the Art Market

The growth of the museum industry is also playing a crucial role. With more than 700 new museums opening every year, the museum industry has become a global economic reality in the 21st century. More museums opened between 2000 and 2014 than in the previous two centuries.

Demand for museum-quality works is one of the key factors in the spectacular growth of the Art Market. The Art Market is now both mature and liquid.

Source: Yahoo 


Marron Collection and Mona Lisa Made from Rubik's Cube

A couple of interesting items happening withint the art world. First, the Marron  which is being privately sold through Gagosian, Pace and Aquavella has, according to artnet news sold two Picasos to Steve Wynn for $105 million. There are reports that more than $200 million worth of art has already been sold.
Steve Wynn Paid More Than $100 Million for Marron’s Picassos – The casino mogul is reported to have snapped up two Picassos, Woman With Beret and Collar (1937) and the 1962 portrait Seated Woman (Jacqueline), from the estate of the late Don Marron for $105 million. Wynn is believed to have already told friends about the purchase, though a spokesperson for his art business did not confirm or deny the sale. Another collector who was offered works from the estate, which is being sold by Gagosian, Pace, and Aquavella galleries, says that artworks worth more than $200 million from the collection have already found new homes. (Wall Street Journal
 Source: artnet news 

CNA reports on a 2005 art project of the Mona Lisa made from 300 Rubik's cubes sold at auction for over $500,000.

CNA reports
PARIS: A Mona Lisa as puzzling as the smile of Leonardo da Vinci's muse - made out of nearly 300 Rubik's Cubes - sold for nearly half a million euros at an auction in Paris on Sunday (Feb 24).

Created by the French street artist Franck Slama, famous for the pixellated Space Invader mosaics that have popped up on city streets around the world, the "Rubik Mona Lisa" sold for 480,000 euros (US$521,000), a record for the artist, Artcurial auction house said.

Its guide price was 120,000 to 150,000 euros.

Slama, who works under the pseudonym "Invader", has playfully styled himself the founder of a new school of art that uses the iconic 1980s puzzle as the medium: "Rubikcubism."

The 2005 "Rubik Mona Lisa" was the first in a series of pieces inspired by the great paintings in history.

Slama has also produced pixellated reproductions of Edouard Manet's 1863 masterpiece "Le Dejeuner sur l'Herbe" (The Luncheon on the Grass) as well as Gustave Courbet's "L'Origine du Monde" (The Origin of the World).
Source: CNA 


Denver Public Library's Art Collection

This April 24-27 the International Society of Appraisers will hold its annual conference in Denver Colorado at the Brown Palace Hotel. I found this Denver Post article on the Denver Public Libaray's art collection both interesting and timely. The main collection at the library was assembled in the 1930s, and the rest were as donations were made. So, if you are in Denver for the ISA conference, or just visiting for other reasons, the Denver Public Library might be a destination.

The Denver Post reports
The Denver Public Library’s art collection is one of Colorado’s least-appreciated cultural treasures, a well-kept, well-cataloged and loosely connected assemblage of colorful and impressive objects that span multiple art movements. Thanks to the state’s world-class geography, it’s particularly strong in landscapes.

But perhaps more than that, the sprawling compilation is an important civic asset, holding a century-plus of offerings from Denver’s biggest names in painting and sculpture, artists who rose to the top of their fields and defined the creative eras in which they lived.

It’s also full of surprises, as the current, greatest-hits exhibition at the Central Library’s Vida Ellison Gallery reveals.

“We have a wonderful and fairly extensive collection, and it’s relatively unknown,” said Rachel Vagts, DPL’s special collections and digital archives manager. “This is really an opportunity for us to showcase it.”

It’s best to say, upfront, that the library’s collection is not finely tuned. No doubt, the roster is impressive, and familiar names include Albert Bierstadt, Herbert Bayer, Allen Tupper True, Vance Kirkland, Angelo di Benedetto, William Sanderson, Frank Mechau, Roland Bernier and others.

There are also some of the city’s more recent art stars in the mix, including Steven Batura, Sushe Felix, Mel Strawn, Evan Anderman and Carlos Fresquez.

And there are skilled artists who have been overlooked (not surprisingly, they are largely female): Martha Epp, Elisabeth Spaulding, Amelia Potter and Reba Lee Savageau.

But these artists’ best works are not necessarily represented. There is one undisputed masterpiece in the collection, Albert Bierstadt’s grand, 1877 “Estes Park, Long’s Peak,” though that’s in the care of the Denver Art Museum, the library’s “good, across-the-street partner,” as Vagts puts it, and an institution better-equipped to foster important works. But better examples of many of the artists’ products can be found at DAM, or the nearby Kirkland Museum of Fine and Decorative Arts, or at the Colorado Springs Fine Arts Center.

That has everything to do with the way the library’s collection was assembled. Nearly every piece was donated. The library only actively collected for a few years in the 1930s, filling in as an early repository for local efforts before DAM got serious about Western art.

Other than that, it’s happenstance. Someone offered to donate a piece and the library accepted.

That’s not to take anything away from just how entertaining the current exhibit is, or how interesting. Deborah and Warren Wadsworth, long-time library volunteers — and noted collectors — who organized the show had a lot of treasures to choose from.

Western art fans, in particular, will have plenty of the breathtaking experiences they crave, and in a range of offerings, from James Disney’s hyper-real, 1970 “Early Start, Rocky Mountain National Park,” which resembles a photograph, to Burnis Day’s fully abstracted, 1984 “Colorado River,” which reduces craggy rocks to something akin to the lines found on a topographical map.

Between that, there are more typical Western landscape examples, paintings that demonstrate the art of capturing high peaks and flowing streams in their most romantic light, such as William Henry Jackson’s “Lower Falls of the Yellowstone,” Pawel Kontny’s “Walpi Village, Hope Village, Arizona,” or Sauvage’s 1959 “Rainmaker,” a rural scene with a particularly interesting perspective that puts a gnarly oak tree front and center of the landscape.

The exhibit’s other strength is that it presents a visual history of the state’s development, with unusual offerings like the 1874 watercolor, “Denver from the Highlands,” co-credited to Paul Frenzy and Jules Travenier, which captures the city before it was encircled by suburban development, or Potter’s “Altman, Colorado,” which pictures the mining town at its most prosperous, or William Henry Read’s casual portrait of “Mayor Robert Speer,” dressed in a white cap and a narrow yellow tie.

And there are several process pieces that dive into how artists thought about their work. Mechau’s “Night Hero,” a 1934 pastel drawing of six horses frolicking on the plains, for example, served as a study for a larger painting. The piece is only 11-inches by 26-inches, but a viewer can see how he worked through shapes and colors and the relationship between individual subjects.

There’s also a fascinating, 1938 pastel by Kirkland, titled “Battle of the Washita-Black Kettle Massacre,” that shows the artist — before he became a noted modernist — digging into local lore while figuring out how to connect the dots of his narrative piece. It’s just a rough sketch depicting frontier soldiers brutally taking down indigenous fighters, but it carries a rich and dark tale.

If some of these works are less-known than they ought to be, it’s probably because the library doesn’t showcase its artistic holdings the way a museum does. In general, it’s more interested in providing high-level research tools to its users than serving as a gallery.

Rather than accessing works on a wall, patrons find them in the library catalog system, organized by subject matter or artist name. Look up a particular topic and you get the whole picture about it: “There’s a piece of art, there’s a book, there’s a documentary film,” said Vagts.

“It’s about how do things fit into the collection,” she said.

Though library users do access the works regularly. “Sometimes it’s scholars who travel a long way, sometimes it’s people with local interest,” said Vagts.  Recently, “it was a class of middle school students.”

“If you want to see a piece, you come to the Mullen Room and we bring it out for you to look at,” said Vagts, referring to the Central Library’s Mullen Manuscript Room, a familiar spot for local researchers.

The library collection continues to grow, though at a measured pace. It accepts art gifts, but is a little more discriminating these days. Donation offers pass through a committee that decides if the object truly fits with the mission of a research institution. There are a number of places where folks can donate their treasures now — museums, universities, private collections — and the library wants to make sure pieces go to their best caretaker.

“If we offer to take something, we’re going to take very good care of it and make it available so our customers and the public can see it,” she said. “If we can’t do that for some reason, then this is not the right place for it.”
Source: Denver Post 


A Big Win for Galleries - Selling Marron Collection

Barron's, as well as the NY Times and Wall Street Journal are all reporting on the sale of former PaineWebber CEO nearly $400 million art collection. What is unique is the important collection is not being sold through Sotheby's, Christie's of Phillips, but through three major galleries. The galleries are Acquavella, Gagosian and Pace.

It will be interesting to follow the sales, if made public and if this is a one off unique sale, or if it becomes a trend.  Concerns for both appraisers and collectors is the lack of transparency in sales reporting.

Barrons reports
Around three weeks ago, Marc Glimcher, president and CEO at Pace Gallery, called on his peers—and chief competitors—at Gagosian and Acquavella Galleries with the far-out idea of coming together to handle the sale of former PaineWebber CEO Donald B. Marron’s renowned art collection.

Shortly afterward Glimcher and his father, Pace Gallery founder Arne Glimcher, along with Bill Acquavella, Larry Gagosian, and Gagosian’s chief operating officer, Andrew Fabricant —all of whom had known and worked closely with Marron on his collection for decades—sat down with the family and their attorneys with their pitch, according to Fabricant.

“We extolled the fact you have enormous institutional memory and authority with these three galleries and you [the family] know them well,” Fabricant says. This is a group who had “lasting and meaningful” relationships with Marron, and “who actually care, because they cared about him personally.”

On Wednesday, the three global powerhouse dealers announced they had won the deal to handle the sale of the Donald B. Marron Family Collection, calling it an “unprecedented move.” Their win means Marron’s masterworks-studded collection won’t be offered publicly via one of the three major auction houses—Christie’s, Phillips, and Sotheby’s—which reportedly had all vied for the collection.

Representatives from the auction houses either offered no comment on the galleries’ announcement, or declined to respond.

As Marc Glimcher pointed out in a news release on Wednesday, the gallery-led project will “celebrate the lifelong relationships that can develop between collectors and dealers, and the role our galleries have played in supporting Marron’s vision.”

The news shocked many in the art world who had expected one of the auction houses would win the consignment.

“It will upset the apple cart enormously for Christie’s and Sotheby’s,” says Philip Hoffman, CEO at The Fine Art Group, an art advisory firm in London. The houses were probably “95% sure it would go to one of them.”

But Pace, Gagosian, and Acquavella all have “good placing power,” Hoffman says. “Each has been in the business for 30 or 40 years. There have been changes in the auction house teams in the last two years, and obviously the [Marron family] trustees decided they wanted to work with continuity.”

Marron, who died unexpectedly in December at age 85, was a renowned financier and art collector, who began buying art about 60 years ago for PaineWebber, a brokerage firm that was sold and folded into the Swiss banking giant UBS AG—along with the firm’s art collection—in the fall of 2000.

But Marron, who joined the board of the Museum of Modern Art in New York in 1975, serving as president from 1985-91, also collected on his own, starting with the Hudson River School painters and later moving to the Abstract Expressionists and beyond, according to the news release. The Marron Family Collection includes major works by Pablo Piccaso, Mark Rothko, Cy Twombly, Willem de Kooning, and Gerhard Richter, among many other stars of the art world, the galleries said.

A total dollar figure for the collection has not been released, although it’s estimated by various news outlets to be in the range of $400 million.

Unlike many collectors who walked through the gallery’s doors, Acquavella remembers Marron as far back as the 1970s, just coming in to “see what you had.” Then, he says, Marron “wanted to know everything about it.”

The first deal Acquavella says he made with the gallery was the sale of a Robert Rauschenberg Combine, a series by the artist that combined painting and sculpture. Then he bought works by Modern masters, including Pablo Picasso, Henri Matisse, and Paul Klee, Acquavella says.

“He loved to be involved in the art world from the very beginning,” he says.

Fabricant says he saw Marron every Saturday for the last 20 years. “He was really inquisitive, extremely tall, and demanded multiple cups of very strong tea,” Fabricant says. (Marron was 6-foot-6-inches tall.)

“He was extremely punctual—first off Saturday morning he’d be in my office,” Fabricant adds. “He loved talking about the shifting sands of the art world, what was developing and what wasn’t. He really loved the information exchange.”

Despite the fact all the gallery owners know each other and are friendly, they are huge rivals. But they came together out of “opportunity and necessity,” Fabricant says. To get them all together “on one page with one common goal—it happened, but it’s unprecedented.”

Having a consortium of three galleries banding together to compete against the deep pockets of the auction houses is unusual, a creative and “brilliant strategy,” says Naomi Baigell, managing director at Athena Art Finance, a unit of the online alternative assets platform, YieldStreet.

But these and other major galleries have been expanding their global footprints for years, and are often competing with the auction houses—which also do private sales—for consignments.

“As much as it’s been a shock, it’s been a long time coming,” says Baigell, who previously was director of corporate art services at Sotheby’s. “It’s a new paradigm now. It opens up the bridge of competition for these estates.”

In the case of the Marron collection, this arrangement makes particular sense because the artworks for sale are pieces “these galleries feel passionate about and know as well as the auction houses," she says.

There is some precedent for galleries to take the lead on a major consignment. In 2008, art dealer Ileana Sonnabend’s heirs reportedly consigned about $600 million worth of art in two transactions, one to a group of dealers in New York and Paris, and a second group to Gagosian, the publication ArtForum reported at the time.

The Marron family collection will be displayed at Pace and Gagosian in May, although the exact configuration of the exhibitions isn’t completely decided yet, Acquavella says. The galleries would like to be able to show the historical span of Marron’s collecting, but that “will be hard to do because it goes back so many years,” Acquavella says. The plan is to borrow pieces that have been given over the years to museums and other institutions, if they can.

The galleries also will be issuing a scholarly book about Marron's life and his collecting, that will accompany the exhibition. The volume, to be produced by Phaidon Press, “will explain what a great collector he really was, what a passionate collector he was,” he says.

That, Fabricant points out, will be quite different than an auction catalog that “ends up on a recycling heap,” the day after a public sale.
Source: Barrons 


Keynesian Economics and Investing in Art, Emotional Dividends

The Washington Post ran an interesting Bloomberg article on noted economist John Maynark Keynes about collecting and owning fine art.  The Post/Bloomberg article reviews a recent Oxford Academic article looking at Keynes' collection and value based on insurance appraisals and note the increase in value over the years, showing strong increases, but still lagging behind the stock market index. Also, the article notes the following on the value increases "The ten most valuable items of the works he amassed account for 88% their total value — and just two of the works account for almost half of the entire collection’s valuation."

If you wish to review the Oxford Academic article which studies the portfolio and art collection of economist Keynes, click HERE.

The Washington Post reports
John Maynard Keynes was an economist, an investor, and an art patron. In the aftermath of the global financial crisis, his eponymous flavor of economics has become fashionable again. After a faltering start losing money in the currency markets, Keynes enjoyed a glorious run as a stock picker, building an endowment that still benefits his alma mater King’s College, Cambridge. For those wanting to emulate his prowess collecting paintings, a new study attempts to calculate how his art investments have fared compared with market returns.

The good news is that the study, published on the Oxford Academic website, suggests wealthy collectors can potentially enjoy the “emotional dividends” of owning art without missing out on returns. The bad news is that they’ll have to be either pretty astute in picking winners, or damned lucky in the artworks they buy. Keynes probably benefited from both. 

Keynes started building his collection in 1918, buying works by Cezanne and Delacroix. In the following years, he added pieces by Cezanne, Degas, Matisse, Modigliani, Picasso, Renoir and Georges-Pierre Seurat. The latter purchase,  at a price of 400 pounds ($520), was a preparatory study for the pointillist artist’s most famous work, “A Sunday Afternoon on the Island of La Grande Jatte.”

He resumed purchasing artworks between 1935 and 1937, including spending 3,500 pounds on Cezanne’s “L’Enlevement,” the most Keynes ever parted with for a single piece. By the time he bequeathed his portfolio to King’s College at his death in 1946, he had spent a total of 12,847 pounds amassing 135 pieces. (I sit on the King’s College investment committee that manages the endowment.)

While the report says it found no evidence that Keynes ever sold a painting he’d purchased, he wasn’t sentimental about his collection; in his will Keynes gives permission for its executors to sell parts of his bequest if needed to maintain his widow’s income.

The study values the collection over time by using various insurance appraisals conducted over the years as well as estimates commissioned by the authors from specialists in 2013 and 2019. If the combined works had kept pace with inflation, they would have been worth about 500,000 pounds last year. Instead, they were worth 76.2 million pounds, not too far short of the 90.2 million pounds the authors calculate Keynes would have generated in the U.K. stock market. “The long-term returns from the Keynes collection are substantial,” according to the report’s authors, David Chambers and Elroy Dimson of the University of Cambridge’s Judge Business School and Christophe Spaenjers of HEC Paris.

But there’s a catch. The ten most valuable items of the works he amassed account for 88% their total value — and just two of the works account for almost half of the entire collection’s valuation.

While the study doesn’t identify which works they are, I’m pretty confident that the Seurat study I mentioned earlier, which currently hangs in Cambridge’s Fitzwilliam Museum, is one of the blockbusting pair. The other, which the study says Keynes acquired for the princely sum of 1.50 pounds, was worth 20 million pounds in the most recent valuation. That’s quite a return.

If Keynes hadn’t been lucky or skilled enough to have bought those two stellar performers, the value of his collection would fall far, far short of what the stock market has delivered. “Extreme idiosyncratic positive returns — or the absence thereof — will matter a whole lot for the total return of any art portfolio,” the authors of the study write, with masterly understatement.

So the lesson from Keynes, if there is one, seems to be that in buying art, those emotional dividends stemming from the joy of ownership are probably a more reliable motivation than the prospect of turning a profit. 
Source: The Washington Post 


Fine Art and Fractional Ownership

 Yahoo Finance ran a rather interesting and good article on fractional investments in fine art and collectibles. This is a growing sector for investing in fine art, and appraisers, art advisors and financial advisors should all be aware of the various products and offerings and have a basic understanding of how fractional investing and ownership works.

The Yahoo/Bloomberg article gives a good understanding of the process and the currently players in the fractional art and collectible ownership marketplace.

Yahoo reports
Jonathan Sharpe, a 25 year-old accountant in Greensboro, N.C., never thought of himself as a “baseball guy,” but when he saw a 1909 Honus Wagner T206 baseball card valued at $520,000, he decided to buy it.

Not all of it, though. The card was being issued through the fractional ownership collectibles site Rally Rd.—there were 10,000 shares valued at $52 apiece. “I thought it was a good idea,” Sharpe says. “They broke it down into enough shares that it was affordable.” He had the Rally Rd. app open when the card listed and bought a single share; less than 20 minutes later, every single share had sold. “It was insane,” he says.

Sharpe, who heard about Rally Rd. on Twitter, is one of thousands of individuals around the globe who’ve bought tiny fractions of luxury collectibles in an effort to participate in an economy previously reserved for the very wealthy.

“There’s a big focus around the investment aspect” of collectibles, says Micaela Saviano, a partner at Deloitte Tax LLP. “There’s been such a run-up in the market in the last 20 years, and there’s more and more media focus around growth in the art market.”

It’s not just art and baseball cards. In the past few years, these fractional ownership structures have sprung up for vintage cars, Magic: The Gathering cards, racehorses, vintage sneakers, and comic books.

John Day, a senior manager at Deloitte and a Rally Rd. user, says he’s spent about $21,000 on shares in Lamborghinis, watches, baseball cards, and rare books. “As someone who’s not going to buy a full Ferrari, I now have access to [invest in] one,” Day says. “But I don’t have to maintain it, insure it, secure it, or store it.”

Different Models

Each company’s model is slightly different. Rally Rd. (“The investments of the rich, now available to all”) allows people to buy and sell shares of collectibles while maintaining a block of shares in each. Feral Horses allows people to buy and sell artworks, then takes a commission on the money raised for each object. Masterworks, based in New York, buys artwork at auction, sells shares of the art, and then takes a fee and cut of the profits when it’s sold.

There are more than a dozen of these companies around the globe. A partial list includes: Acquicent (collectibles and fine art), Artopolie (fine art), ArtSquare (fine art), CurioInvest (supercars), Look Lateral (collectibles), Maecenas (fine art), Malevich (fine art), My Racehorse (race horses), Mythic Markets (games and comic books), and Rally Rd. (cars, watches, sneakers, and other collectibles).

All share a unifying premise: Luxury goods won’t just hold value, they’ll appreciate. “Our thesis is that art is a large asset class,” says Masterworks founder Scott Lynn. “If you look at different segments of contemporary art, it’s performed at about 11% every year, and that’s outperformed every major public equity market.”

Survivorship Bias

The reality is far more complicated. All artworks, racehorses, cars, and trading cards are not created equal, and not all of the “investment opportunities” offered by fractional ownership companies are the best in their field.

Just because one racehorse wins the Preakness doesn’t mean that every racehorse has a shot, and just because one Picasso delivers 800% returns doesn’t mean that all Picassos will do the same.

The claim that the art market beats the S&P 500 has been largely discredited, due to its aggressive survivorship bias. “The performance of the [top 50 contemporary artists] is largely a function of the fact that hot artists keep on getting added—after they’ve become hot,” wrote Felix Salmon, then a Reuters columnist, in a 2012 assessment of art market indices.

“It’s a classic case of investing in hindsight: if you only bought things which performed extremely well, then you would have made lots of money.”

Nevertheless, stories about wealthy people buying paintings and then making a large fortune a few years later are seductive, and it’s those stories that many fractional ownership companies are banking on to drive participation.

“People have the perception that any given artwork will triple in value,” Saviano says. “And that’s not the case. Each work of art is unique and needs to be analyzed on its own.”

As a result, it’s easiest to break fractional ownership companies into two broad categories: “collectibles,” for which value judgments are relatively straightforward (is a comic book in mint condition? Does the Porsche have all of its original interior? Is the Rolex rare?); and fine art, for which perceptions of value are constantly in flux.


Multiple collectibles sites have quickly found adherents.

Rally says it currently has $10 million worth of assets under management, with 150,000 active users. The platform has already sold two of its “assets,” a 2000 Ford Mustang Cobra, and a 2006 Ferrari F430 Spider “Manual” realizing gains of 18% and 16%, respectively.

Currently, there are about 60 cars on the site, along with 40 objects that include a gold Rolex. “We’re investors in these assets, up to 10%,” says Rob Petrozzo, a co-founder of the site. “So we benefit from their appreciation.”

Meanwhile, Mythic Markets launched in August 2019, with a “Black Lotus” Magic: The Gathering playing card valued at $90,000. “We sold through the first offering pretty quickly,” says site founder Joe Mahavuthivanij. “One hundred and twenty-four investors got involved in that deal, and I think it came out to an average of $700 per person.”

To the uninitiated, hundreds of people buying shares of a $90,000 playing card they’ll never touch, and thousands of people buying shares in a car they’ll never drive, might seem like a stretch.

But Mahavuthivanij points out that, from his end, “these communities are huge, and global, and Magic’s been around for 27 years now, and it’s continuing to grow.”

It stands to reason, he continues, that a collectible tier has emerged. “There’s an active secondary market where these are changing hands,” he says. “There are aggregators and online auctions that we use as comparable data points—if you were to value a house, you look at comparables in the area; we’re doing the same thing.”


In the art world, definitions of value—not to mention desirability—are much more fluid. Take an artist such as Andy Warhol, whose  market has been languishing since its high in 2014. Anyone can look at an artwork’s return—an 8,220% return in 30 years for Warhol’s Last Supper!—and assume that it’s a smart investment. The person who bought it for $99,000 in 1988 certainly was wise. It sold for $8.2 million in 2018.

But that doesn't mean its value will grow the same way in the future. The 2018 sale price, which includes an auction house premium of nearly 20%, barely eked past its low estimate $8 million hammer price (which doesn’t include that premium). So the work wasn’t quite worth what the auction house expected, making its future value far less than sure. Past results are no guarantee of future performance.

(Other artists whose markets have soared, then deflated in recent years, include Damien Hirst, Jeff Koons, Christopher Wool, and a baker’s dozen of young process-based abstract artists who rose and fell from 2007 to 2014.)

Some of the owners of fractional art companies are carefully messaging around this unpredictability.

“Our minimum investment is €1 [$1.10],” says Francesco Boni Guinicelli, who, with Fabrizio D'Aloia, co-founded Artsquare. It has 3,000 users, 500 of whom have bought shares in a 1984 Warhol silkscreen print valued at €28,000. “We’re not evangelizing investing in art, but rather participating in the art world on a different level.”

The share price, he says, “is symbolic, but our target is the person who goes to a museum and wants to buy a mug with a Picasso on it, or a poster. If you’re willing to buy that, you might want to buy a share of an artwork.”

Artsquare’s business model is built on a 4% transaction fee for buying shares; investors can choose to pay a flat subscription instead.

Feral Horses, one of the other fractional art companies, is based on effectively the same principle: “By making the entry point so low, it opens up completely new possibilities,” says Francesco Bellanca, the company’s chief executive officer. “We sold shares in a €200,000 marble sculpture, which we then loaned to a museum in Rome,” he continues. “Four hundred of the 1,000 or so co-owners then flew to Rome to meet, and mingled. They were part of a community.”

The point, both men say, is that investing in art could be a good investment, but it is definitely a way to become part of an art world community.

That alone, they argue, is worth the share price. “That’s what we try to do on a daily basis,” Bellanca says. “How do we make this [investment] become an increasingly active participation in the art world?” The answer, he says, is that “rather than just give investors an economic interest in the piece, we work with galleries and artists to give them the opportunity to have a follower base that participates in the journey.”

Lynn, of Masterworks, argues that people should feel confident in the art market as a viable investment vehicle. “If you think about portfolio construction in general, a core tenet for any investor is diversification and lack of correlation,” he says. “Art isn’t correlated with other asset classes, and historically, certain segments of the art market have performed very well.”

For some investors, that argument resonates. “It’s not a certain investment, but at the same time I don’t see art to be riskier than the tech world,” says Nadir Luvisotti, a 31-year-old investment banker at Deutsche Bank in London, who spent about €2,000 to buy shares in the Warhol print issued by Artsquare. “Andy Warhol is a famous artist, and probably right now, he’s a commoditized one—everyone knows him and the value of his paintings.”

Hitting A Wall

Investment or no, all fractional ownership plans have to reconcile their “investors” to the fundamental paradox of partial ownership: They’ll never be able to drive their cars, read their comic books, taste their wine, or hang their paintings on their wall.

Buyers might now have access to the theoretical returns of the very rich, but for many of these ventures, that’s it. One of the primary joys of being a collector will, for the time being, still be out of reach.

“Part of the reason people like to own art is to see it on their walls,” says Saviano, the Deloitte Tax  manager. “When you take that away, you have to focus on the investment [component], and when you do that, it has to be substantiated.”

For Day, who bought shares of Lamborghinis on Rally, that hands-on experience is beside the point.

“I’m not so worried about driving the cars,” he says. “If I wanted to drive a Ferrari, I can rent a Ferrari” through supercar adventure sites. “I invested in it because it’s accessible to me. Buying a whole car is a kind of luxury, and whoever does that can say that their collectible car is in their living room. Cool. But that’s not me.”
Source: Yahoo Finance 


Amazon's Jeff Bezos Buying Art

Bloomberg is reporting that Jeff Bezos, founder of Amazon and one of the richest men in the world is starting to put together a fine art collection.

It is reported that Bezos purchased  “Hurting the Word Radio #2” by Ed Ruscha for $52.5 million at Christie’s this past fall setting a record for the Los Angeles artist and “Vignette 19” by Kerry James Marshall, at Sotheby's for $18.5 million.

Bloomberg is reporting
Jeff Bezos kicked off the new decade with a $1.8 billion windfall from the sale of Amazon.com Inc. shares. There’s growing excitement in the art world that some of that -- or another chunk of his 12-figure fortune -- may be used to build an art collection.

Bezos, 56, bought two significant works during New York’s November auctions, according to art dealer Josh Baer, writing in his newsletter the Baer Faxt this week.

One piece, “Hurting the Word Radio #2” by Ed Ruscha, fetched $52.5 million at Christie’s, setting a record for the Los Angeles artist. The second, “Vignette 19” by Kerry James Marshall, sold for $18.5 million at Sotheby’s, more than doubling its high estimate.

“Every season it seems someone new or some new region” comes in and starts buying art and props up the market - “but when it is the world’s richest man it has the chance to move the needle,” Baer wrote in his newsletter without detailing how he obtained the information. “I stand by what I wrote,” he said by email.

Representatives for Sotheby’s and Christie’s declined to comment. Amazon’s press office didn’t respond to requests for comment.

Bezos was seen walking through the previews at Sotheby’s in November. During the evening sale of contemporary art, “Vignette 19” was bought by Cassandra Hatton, Sotheby’s vice president and senior specialist in the books and manuscripts department, on behalf of an anonymous client.

Art dealers and auction specialists said that Bezos -- if he did purchase the works -- would be a major new player in the market. It’s unclear what else he’s acquired.

Entry into the art world would be the latest pivot from the formerly low profile Bezos once cultivated. In the past few years, he’s had a style makeover and rarely been out of the headlines since he and MacKenzie Bezos divorced in 2019. That includes hitting the red carpet with girlfriend Lauren Sanchez and hosting a bash at his Washington mansion for the political and financial elite. He’s also currently house hunting in Los Angeles, according to the New York Post.

The Amazon founder has unmatched firepower to support these interests. He’s the richest person on the planet with a $125.6 billion fortune, according to the Bloomberg Billionaires Index. His interest in art could have a significant impact on a market where new art buyers are often responsible for driving prices higher.

Japan’s Yusaku Maezawa burst onto the scene in 2016, scooping up $98 million of art in two days; a year later, he paid $110 million for a painting by Jean-Michel Basquiat, a record for an American artist at auction. Saudi Crown Prince Mohammed bin Salman bought Leonardo da Vinci’s “Salvator Mundi” for a record $450 million in 2017. The masterpiece was being kept on the superyacht Serene, according to Artnet.com.

Following a slowdown in 2019, the top end of the art market is poised for a boost with two significant collections, potentially worth $1 billion, in play. Some of it may land on the auction block in May during the next big round of New York sales.

“Whatever his motivation,” said Wendy Cromwell, a New York-based art adviser, “Bezos is buying art at the right time.”
Source: Bloomberg