Art as an Investment

Investing in

art
Yikes, Jespah -- I guess a lot of people have missed by posts on Abuzz about the pitfalls of investing in art. No

matter what the marketers try to tell you or a sharp gallery salesperson, art investing has been tracked for near a hundred

years and only 1% of art appreciates. Not very good odds and probably much lower in the past few years with all the

commercial art being disguised as fine art flooding the market. These are mostly in "limited editions" which are

commercially produced Iris drum scan spray prints, serigraphs and some stone lithographs (which are all employing

photosensitive technologies to produce). They are signed and numbered by artists of dubious talent and stature and sold for

thousands of dollars. I don't know how many people have been shocked to find out that their "valuable" print is only worth

20% of the price they paid for it! There is very small exception where a particular artist becomes "hot" for a period that

seems to last from five to ten years and then his market plummets.

The exception of course is my art! I give it to friends for free and it really can't depreciate from that price! ;-)

WELCOME LW!!!

Thanks, Craven --

I'll have to get used to using Lycos again. Had trouble logging on but I think it's cleared up now. Anyone here who has

a question about art investing can feel free to ask me -- I've personally and as a consultant been involved in this aspect

of the business for over fifteen years.

BTW, one of my art

professors told me one should never give artwork away unless you in love with that person. I have been selling my own work

since my college days but have had more experience with selling the work of other artists. I am seriously considering going

back to painting in earnest one day soon -- the lighting business has slowed considerably and I would have an advantage in

knowing the business part of the art world.

George, you're right, of course, about art being a poor investment in terms of predictable appreciation. But people do speculate all the same. That's what the stock market is all about. Ina pinch, it can also serve as a great tax write-off. Buy a painting at a gallery. When times get tough, give the painting to a museum or other tax-exempt institution. Write it off on your taxes as a charitable donation.

Bookmarking. (Do we do that here??)

I guess we do sometimes, ossobuco. Sometimes we just click the "Watch this topic for replies" footer just below the page number. It will get you updates same as abuzz. If you bookmark you will need to go to the very top menu on the page and select "Control Panel" Lots of options, including the opportunity to check the interactions involved in - it's some somewhat similar to "My Abuzz" except that there are more options. Oh, yeah, these actually work.

Lightwizard,are you an art agent perchance?
Perhaps you´d like to look at my work:I´ve started a topic here in the art
section.
yours,hebba.

Besides what roger has already told you there is a recent feature. You can add topics to your favorite box thingie. You don't have to have posted in them or anything. The box can hold up to 50 topics (if you pass that it deletes the whole list as I found out recently) and is ordered in the order you added them.

Hebba -- no, I am not an artist's agent but have owned art galleries off and on for about thirty years, most recently in Newport Beach, CA at Lido Marina Village. I closed that operation and from time to time resell art but lighting design has been my major business. I'm really more interested now in creating my own work.

Craven -- although some collectors would like to fancy the idea that buying and selling art for profit, it's very rare and a long term investment of at least twenty years. The market is more volatile than the stock market where one mistake can sink an investor. Those who can afford to dabble in it are multi-millionaires who can just say, "Oh, well, I'll just keep it." The Japanese lost millions of dollars in the Eighties -- the most notable was the Van Gogh "Irises" that the Getty Museum purchased. That was during the time when the auction house was providing financing in order to drive prices up -- a practice which has ended up in civil and criminal litgation with two or three parties ending up in prison.

I once handled the work of Hiro Yamagata, the Japanese artist whose whimsical images of Paris were the rage. If one bought in the late 70's and early 80's, they were pleasantly surprised at making up to ten times on their investment on a few of the images in the middle eighties only to find the market fall completely apart in the late eighties and early nineties. It really never returned except for a few serigraphs. It costs about $75.00 each to produce a screenprint and even Yamagata's signature isn't worth more than $25.00. You figure out what the instrinsic value is and then figure out how it gets so inflated (even at the initial prices!)

The point is, as a lot of money has been lost in investing in art as made so the prime reason to purchase art is still that you love it and want it on your wall. Otherwise, it's a case of a fool and his money 90% of the time and if one makes money it is the result of fate more than anything else. You have to consider how flooded the market became with what is called "fine art" but is really commercial decorator art. As a matter of fact, one has to study art law if they are a dealer in order to be careful what they say about buying art for investment -- they could end up in prison. That certainly stopped all the telemarketing of, say, Dali prints (many of them phony)!

All the art I buy is simply art that I want to keep. I don't like art as an investment. ;-)

When you walk into a commercial gallery, especially one of the mall galleries, you're being qualified in the first few minutes. The liklihood is that there are dorsal fins about and if they get you into a viewing room (the used car closing room euphemism), they are likely to still try playing the investment card even if you don't ask. The reply from a sincere art consultant/salesperson if you do ask should be, "I'm not qualified to address that -- I would advise anyone to purchase art because the love it and want to own it," or words to that effect. If they start hyping that "prices are going up 10% a year" or words to that effect (or even more grandiose claims), I'd get out of there fast. The art marketers like to take control of their market and will publish price lists that show out-of-print limited editions at some remarkably high prices. In reality, that is to protect them if they were to find prints for good customers who insist they must have that print and they would go out into the secondary market and try to buy the print. However, on limited editions, one can do that for themselves. Retail gallery salespeople do not really want to address that and even let anyone know there is a secondary market. Online, there's a plethora of artwork of dubious value. If you're buying to decorate with, I'd advise a good New York Graphic reproductions nicely framed over some commercial illustrator art in limited edition. It's always best to purchase originals and if one builds a collection over the years, buying in respected commercial galleries, they could end up with a valuable collection in twenty to fifty years (that's obviously the window and limitation of building a comprehensive art collection). I know collectors who have modest examples of some successful living artists including Jasper Johns and Robert Rauscenburg prints who originally did not invest a great deal in these prints -- Gemini G.E.L. has been a great source over the years for fine contemporary prints and there are others. It's a question of priorities -- there's a body of collectors who would rather sit around an open flat on inexpensive furniture and have really good art on their walls!

Art As An Investment
Is a good thing if you have a good eye and can afford it.

I almost got banned from Abuzz
For contradicting a salesperson from Monet.com when they were advertising on the site. All I did was answer a question about art scams.

Art Appraisers
My former husband is an appraiser for the IRS and his first panel was to evaluate the value of limited edition prints in the 80s it was a huge scam. Just like Master recordings, investing in Kiwi fruit farms, etc. The general rule of thumb in invetments and getting a tax break is their must be risk. Investing in real estate is risky and almost always allowed by IRS. However, buying over priced art, hold it for a year, getting an over blown apparisal, and then donating it to a non for profit institution will not hold up. IRS also watches art in estates, in that situation folks get a low appraisal to avoid the estate tax.

Jespah qualified her discussion with "if you could afford it." That is not altogether true -- too many who can afford it will buy into the hype of limited editions and end up paying way over the market value of even the originals by these artists. There was the "investor" who bought all those Erte sculptures and you can bet he's still sitting on them (ha, ha, maybe literally!) By the same token, someone can start off with a modest amount of investment when they are young and buy what they can afford of what is discerned as genuine fine art, building a pretty respectable collection which may grow in value. The term fine art has been bandied around so much that it has left it with virtually no meaning.
You could have bought a Warhol in the late 50's and early 60's for less than a thousand dollars. However, you would have bought it because you love his art with investment as a secondary consideration (or you should have). It's certainly hindsight as if I had bought a large Campbell Soup Can (and I could have afforded to buy one of them), it would be worth millions. However, there was a vast majority of artists who came and went with little or no movement in their market. There's only a small handful of contemporary artists who works have appreciated over a twenty year period to the point where you can resell it at any kind of impressive profit. Remember that you have to pay a dealer, a gallery, an auction, et al for the remarketing. The internet hasn't proven out as a good place for a secondary art market as everyone is looking for bargains. That's very true about the IRS estimations but it's more for claiming that someone lost money on the sale of their art. They have to claim that it was worth much more than it actually is and you won't find bonefide evaluations unless you hire an independent appraiser at a cost of $350.00 on up! The laws now being enacted are to the effect that the art gallery or dealer who sold the art cannot provide any appraisals. As a matter of fact, if you buy from an auction, there is no guarantee of the value or that the works is genuine! You have to know what you're doing and that involves an education and working knowledge of the art business that is far more complex than learning the stock market. It's an elusive market that amatuers and even some professionals should stay ten thousand miles away from. The statistics are over 100 years old now -- buy one hundred pieces of art and one of those pieces may appreciate (and that's buying as wisely as one can). With the proliferation of limited edition prints, that is going in the wrong direction and may end up as much less than that in future tracking. Buy what you love, with some classes in art history and appreciation under your belt and constantly visiting art galleries in reputable areas for fine art. Taos, New Mexico, for instance is an art colony and I'm not saying you could never find some gem there that would have the potential of an investment but it's unlikely. Laguna Beach, California is the same -- although recently some reputable galleries showing some significant work have popped up there. I am very familiar with that town having lived there so many years and still live close by. Soho and Chelsea in NYC, Bergamont Center in Santa Monica, CA, many areas in San Francisco and in every major city are places to look for the real thing. Gemini GEL for graphics I believe is online but I haven't checked recently.

BTW, the era and genre of paintings fluctuate wildly. Impressionism can be hot in one decade and flat the next. I would say that if you purchased a Monet, a Picasso or a Pollock now and held onto it for twenty years, it would be unlikely you would not make a profit selling it. How much profit is the question and we're talking billionaires being able to afford any major works by those artists and they nearly all have art consultants who evaluate what they are looking for.

Right GLW, fair market price is all anything is ever worth. Sometimes their is a glitch in the system, some one pays a huge price for something that they have to have. But one large buy does not fix the price.

I really feal so sorry for those folks who bought all those Salvador Dali prints. You see them all over e-Bay and in the classifieds of news papers. They are not worth anything. Dali was signing blank paper and the were running off the presses lickity split. How many signed, number, limited additions do you think can be lithoed or done on an offsett in just one 24 hour period thousands.

Interesting stuff people.I had NO idea that there even WAS a market for "limited prints".Firstly they sound revolting .They may well be limited but who actually wants a reproduction of ANYTHING hanging on their walls.Is that all there is on sale in the average U.S. mall gallery?Where does one find the young angry artists work?The unknowns,the debutants,there must be loads of interesting art on offer in that enormous country of yours yet everyone is talking about limited prints and such-like.
Maybe Mr.or Mrs.Pants only buys stuff they think is "worth" something?Am I way off the mark here?