Friday, August 5, 2016

The Art Market Really Condensed

August 5, 2016

The art market today is a vibrant, sometimes volatile, sometimes crazy, constantly dynamic bazaar. 
Hot artists have become brands unto themselves.  They may see their works skyrocket confoundingly high one day only to disappear into oblivion the next.

I know this is not always popular with the traditional art for art’s sake believers, but art has become an asset class and people now buy or “invest” in art both for the pleasure of having something on a
Goya, The Sleep of Reason Produces
Monsters from Los Caprichos, 1799.
Etching, aquatint, drypoint,and burin,
plate: 21.2 x 15.1 cm (Metropolitan
Museum of Art).
wall but also to see it increase in value.
Indeed, the art market is so intertwined with “the transaction” that sometimes it is hard to not see an artwork as anything but an asset.  The popular press often covers sales with columns that look like they could reside in the finance section; buyers may buy a work sight unseen based on the advice of an art advisor that the work will increase in value.

Though this blog will focus on art as an asset and the artist as brand, I will never argue against the
importance of taste or connoisseurship -  people should buy what they like.

When I approach the art market, I focus strictly on market performance.

If you want to buy art to see it appreciate, you should care about the art market.  It is bigger than you think, supply and demand are global, and there is general growth; even in a down year, the 2015 numbers compiled by economists who follow the market bear this out.

I’ll mostly concentrate on the Post-War & Contemporary Art Market (sometimes called Post-1945).  From an art history or museum context, this period starts with abstract expressionist works like those of Jackson Pollock or Mark Rothko
You might ask why we begin here.  Quite simply Post-1945 is the most readily available and the most associated with art as an investment.  Let’s hit a few key points you need to know.

The Good:
  • Post-1945 makes up about 46% of the almost $64 billion plus art market. 1
  • The market is global with artists and buyers participating worldwide.  
  • Just under $7 billion in worldwide auction sales were realized last year. 2
  • You don’t need to be a millionaire to buy art, established, blue-chip artists have lithographs, pen and ink drawings, works on paper selling for a few thousand dollars. 
  • Financial institutions actively look for ways to finance purchases or make loans against art, providing clients with access to liquidity. 
The Not So Good:
  • Pundits have, for the last couple of years, been predicting a bubble burst sending prices and values hurdling downward. 
  • Post-1945 sales in 2015 slumped by approximately 7% -  maybe not a bubble bursting but a downtown nonetheless.  
  • Many art funds have had trouble making the types of returns that one would expect from normal securities.
As with other markets, the art market is not easy to master.  My goal is to provide you with the tools needed to start the conversation and then show how to look at the art market both broadly and, at times on a more granular level.

Stay tuned,


1. Data from the TEFAF Art Market Report 2016, prepared by Dr. Clare McAndrew, The European Fine Art Foundation, 2016, p. 15.   
2. I bid.

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