Last week, I received an email from a client with the subject “Art Crash.” The email was a link to an alarmist Bloomberg story describing the current state of the emerging artist market as one in which flipping, particularly at auction, is no longer profitable. To that, the vast majority of the art world breathes a sigh of relief, but to those only skimming the headlines, it sounds as if the sky is falling. Marion Maneker from Art Market Monitor wrote an intuitive rebuttal article explaining that, “The headline is about works being sold for 90% losses, but that’s only a shock to anyone who doesn’t follow the art market at all. Emerging artists have always been risky acquisitions… Few artists have seen their markets rise steadily without pullbacks.”
My April 2016 newsletter covered the topic of emerging artists, and I want to reiterate here that investing in art requires portfolio management like any other investment. I recommend buying a mix of emerging and established artists. Almost everyone buying art wants it to be an asset, but they don’t want it to behave like one. Unfortunately, you can’t have it both ways.
In addition, the work described in the Bloomberg and Art Market Monitor articles sold above the high estimate at Phillips a few days later (September 20, 2016), which is less than the want-to-be flipper bought it for – the seller at the time got out at the high – but still much more than the original owner paid for it in 2012. Timing is everything, and it helps to have a realistic view of the market.
09/26/16