The Whys of the Art Market

Forbes just posted an interesting online article, dealing at first with the London sales. As readers of the AW Blog know, three of the major evening sales were very good, and some of the secondary sales were not good at all.

Perhaps more importantly than the quick review of London auctions, the Forbes post also mentions art as and investment class and actually makes the following important statement, In other words, the art-as-investment meme is here to stay. Like it or not.

The article leaves the London auction review process and asks the question of why are some sales so amazingly strong and others not.  Understanding art and how the market operates is an important factor when it comes to investing in art as an asset.  The author states she will be looking into some of the whys of the art market in future articles.  I look forward to reading them.

Forbes reports

That kind of success would explain why more and more financial news organizations have taken to covering the art auctions and major art fairs. Noted the FT, for instance, “After a sharp drop in interest following the 2008 crisis, global investors have turned back to art as a way to diversify portfolios and hedge against the negative effects of volatile equity and currency markets and high inflation.  In a survey of more than 70 bankers and investment managers by wealth management forum Family Bhive, art was identified as the asset class with the best chance of positive returns this year, ahead of alternative investment funds, soft commodities and property.”

In other words, the art-as-investment meme is here to stay. Like it or not.

Yet almost all of these reports fail to address the critical point. They offer the who, the what, the where and when and how: but few, if any, ever explain the why. Why do the record-breaking works achieve such stand-out results? Why do buyers engage in battle over one Richter and not another? Why is Richter so valuable in the first place, and why did the Bonham’s sale fail so miserably when the others did so well?  Understanding these factors is key to safe art investment – and similarly, only those who can fully appreciate the distinction between one work and another are likely to make such investments safely (not to mention finding the most enjoyment in the art they buy along the way).  This, quite simply, is why the world’s biggest art buyers, the royal family of Qatar, have taken on some of the most knowledgeable talents in the business to advise them.  But there are other, more rewarding ways, available even to non-royal : Look.  Observe. Study.  Read. Watch. And get thee to a museum – as many and as often as you can.
Source: Forbes 

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