Refresher: Why Art Isn’t A Great Long Term Investment

by Art Fag City on October 17, 2008 · 16 comments Blurb

warhol_marilyn.jpg
Andy Warhol, from the series Marilyn Monroe (Marilyn), 1967, screenprint, AP edition C/Z, 36 x 36 inches. Collection of the Jordan Schnitzer Family Foundation

I hate to rain on the “art seems the only safe bet for investors right now” parade, but anyone who thinks a lot of post-war and contemporary artists aren’t over valued needs to consider just how much a Warhol painting sells for relative to its long term investment potential.   Annie Deakin at the Independent clearly hasn’t read Todd Gibson on this subject, and apparently, neither have all the people in “exhibition halls”  who think “Art is the new gold”.   He goes through a fair amount of numbers in his two part series, but by the end he wisely points out that most art purchases only barely keep up with the cost of inflation.  I hate to say it, but I find the idea that people might find art a more secure investment frightening.   Obviously I want artists and galleries to do well, but I haven’t much cared for the results of the housing bubble.   The thought that the art might represent something similar sounds like a disaster waiting to happen.  If you ever thought there was animosity directed towards the art community, imagine how bad it would be if the global market considered it a stable commodity only to have the bottom fall out.

UPDATE: Economics blogger Felix Salmon responds noting that Annie Deakin is the acting editor of mydeco a website selling “home furniture and interior design: beds, sofas, curtains, paint, wallpaper, tables and chairs”, as well as “art photography prints”.  Deakin isn’t likely to be impartial, but Salmon also observes that nobody is.

He goes on to dispute Deakin’s assertion that art like gold is “reassuringly tangible” and therefore a good investment,

…There are lots of things which are “reassuringly tangible”. Gold might be one of them — although at $788 per ounce today, it’s no longer twice the price it was four years ago, and it’s fallen by more than 20% from its highs. Other reassuringly tangible things might include stuffed animals, hardback books, and chopped wood. Being reassuringly tangible doesn’t make anything a store of value: it just makes it stuff.  And, just like other stuff, 99% of art will never again be worth the money that was paid for it.

In the case of the art on sale at mydeco, you can reasonably make that 100%. You might absolutely love your window roller blind with a picture of cars on it, but it doesn’t have any resale value.

Very well put.  One final observation on the subject;  mydeco.com‘s tagline Art For All, sounds remarkably similar to 20×200‘s “It’s art for everyone.” I suspect that’s not an accident, and I don’t know how happy I would be about it were I Jen Bekman.

  • http://www.ianaleksanderadams.com Ian Aleksander Adams

    Seriously!

    Art has never seemed anything near stable to me – investment wise or otherwise. It’s just going to lead to more back of the canvas purchasing. Ridiculous.

  • http://www.ianaleksanderadams.com Ian Aleksander Adams

    Seriously!

    Art has never seemed anything near stable to me – investment wise or otherwise. It’s just going to lead to more back of the canvas purchasing. Ridiculous.

  • The Hill

    I paint for a living, and I know my works sell to people I probably don’t like, and I know that pricing is not something I really understand. You can’t just add up an hourly commitment for a whole sale price and then tag on the retail price. So, the money value is slippery both at the production level as well as during its post sale ownership level. However, a comparison to other luxury objects is fruitful. (Is ptg. a luxury object?) I was mindlessly trolling thru my cable channels and found a car auction where a 2001 Bentley something or other was sold for 65K, while the commentator mentioned its original purchase price in ’01 was 350K. Zikes! I have also heard that 100K RV’s and large powered boats drop roughly 20% of purchase value once possession is taken. As mentioned above, housing can be dicey, and stocks in GM closed as low as $4.00 a share last week. So, in comparison, a painting by a blue chipper, might not be so bad after all. Personally I agree w/ my demented uncle Caz, ‘Save your money and buy whiskey.’

  • The Hill

    I paint for a living, and I know my works sell to people I probably don’t like, and I know that pricing is not something I really understand. You can’t just add up an hourly commitment for a whole sale price and then tag on the retail price. So, the money value is slippery both at the production level as well as during its post sale ownership level. However, a comparison to other luxury objects is fruitful. (Is ptg. a luxury object?) I was mindlessly trolling thru my cable channels and found a car auction where a 2001 Bentley something or other was sold for 65K, while the commentator mentioned its original purchase price in ’01 was 350K. Zikes! I have also heard that 100K RV’s and large powered boats drop roughly 20% of purchase value once possession is taken. As mentioned above, housing can be dicey, and stocks in GM closed as low as $4.00 a share last week. So, in comparison, a painting by a blue chipper, might not be so bad after all. Personally I agree w/ my demented uncle Caz, ‘Save your money and buy whiskey.’

  • The Hill

    I paint for a living, and I know my works sell to people I probably don’t like, and I know that pricing is not something I really understand. You can’t just add up an hourly commitment for a whole sale price and then tag on the retail price. So, the money value is slippery both at the production level as well as during its post sale ownership level. However, a comparison to other luxury objects is fruitful. (Is ptg. a luxury object?) I was mindlessly trolling thru my cable channels and found a car auction where a 2001 Bentley something or other was sold for 65K, while the commentator mentioned its original purchase price in ’01 was 350K. Zikes! I have also heard that 100K RV’s and large powered boats drop roughly 20% of purchase value once possession is taken. As mentioned above, housing can be dicey, and stocks in GM closed as low as $4.00 a share last week. So, in comparison, a painting by a blue chipper, might not be so bad after all. Personally I agree w/ my demented uncle Caz, ‘Save your money and buy whiskey.’

  • Art Fag City

    You mentioned on another comment thread that you were also a curator at one point. Was there overlap in those careers?

  • Art Fag City

    You mentioned on another comment thread that you were also a curator at one point. Was there overlap in those careers?

  • reportage

    jen bekman was surely not the first person to realize that prints can be made on a mass scale cheaply to allow everyone access to decent art.

  • reportage

    jen bekman was surely not the first person to realize that prints can be made on a mass scale cheaply to allow everyone access to decent art.

  • Art Fag City

    The comment didn’t suggest that she was, only the similarity between the two slogans. Interestingly however, over the weekend I saw the Gilbert & George show at the Brooklyn Museum and noted that they self publish their books under the publishing house name Art for All. Given that myartdeco.com is an English outfit, I suspect it’s more likely they borrowed the slogan from the duo. Kudos to them if that’s the case, as it’s a remarkably good reference, what with the pair’s mantra of making accessible art.

  • Art Fag City

    The comment didn’t suggest that she was, only the similarity between the two slogans. Interestingly however, over the weekend I saw the Gilbert & George show at the Brooklyn Museum and noted that they self publish their books under the publishing house name Art for All. Given that myartdeco.com is an English outfit, I suspect it’s more likely they borrowed the slogan from the duo. Kudos to them if that’s the case, as it’s a remarkably good reference, what with the pair’s mantra of making accessible art.

  • http://www.artmarketblog.com Nicholas Forrest

    People seem to think that in order for art to be a good investment a majority of works on the market need to have experienced a significant increase in value which is never going to be the case. Art is a good investment when chosen correctly and when approached correctly. If this wasn’t the case then there wouldn’t be 30 odd art investment funds returning around 10-15% per annum to their investors. Investing in art successfully is not as easy as some people would make out which causes problems when so many people go into the art market with an incorrect impression and false expectations of art as an investment

    Nicholas Forrest
    http://www.artmarketblog.com

  • http://www.artmarketblog.com Nicholas Forrest

    People seem to think that in order for art to be a good investment a majority of works on the market need to have experienced a significant increase in value which is never going to be the case. Art is a good investment when chosen correctly and when approached correctly. If this wasn’t the case then there wouldn’t be 30 odd art investment funds returning around 10-15% per annum to their investors. Investing in art successfully is not as easy as some people would make out which causes problems when so many people go into the art market with an incorrect impression and false expectations of art as an investment

    Nicholas Forrest
    http://www.artmarketblog.com

  • Shane

    I disagree with the thrust of this editorial. In these economic climates, it is a total CRAPSHOOT as to what investments hold value. I would have to think that even ‘marginal'(I don;t care for the semantic argument, thanks) artists that can maintain a productive career in this day and age can manifest decent prices. And on the other side of the coin, if dumbass investors are flocking to the next safe haven, why NOT art? Artists should cash in while the iron is hot. To think that Art has become a commodity to invest in should attract just the right amount of naive old-school money to line a few deserving pockets.

  • Shane

    I disagree with the thrust of this editorial. In these economic climates, it is a total CRAPSHOOT as to what investments hold value. I would have to think that even ‘marginal'(I don;t care for the semantic argument, thanks) artists that can maintain a productive career in this day and age can manifest decent prices. And on the other side of the coin, if dumbass investors are flocking to the next safe haven, why NOT art? Artists should cash in while the iron is hot. To think that Art has become a commodity to invest in should attract just the right amount of naive old-school money to line a few deserving pockets.

  • Shane

    I disagree with the thrust of this editorial. In these economic climates, it is a total CRAPSHOOT as to what investments hold value. I would have to think that even ‘marginal'(I don;t care for the semantic argument, thanks) artists that can maintain a productive career in this day and age can manifest decent prices. And on the other side of the coin, if dumbass investors are flocking to the next safe haven, why NOT art? Artists should cash in while the iron is hot. To think that Art has become a commodity to invest in should attract just the right amount of naive old-school money to line a few deserving pockets.

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