I had a client recently complain to me that his painting only ascended 1% per year since he purchased it. I asked him what else in his portfolio could offer the same returns at this point... and he relented.
While artwork should never be sold as investment, it has proven to be a relatively stable vehicle for placing money into long-term assets. Given the recent fluctuations and instability in the stock market, few of our current investments can claim a 1% return rate per annum…. However, even during a market slump, this client’s work had.
A dealer should never attempt to convince you that you should purchase Art solely on the basis of “making money”. Art is subjective and can lose value as easliy as any of your other investments. But in most situations you are encouraged to buy low and sell high. You didn’t buy GOOGLE at it’s apex because it would have made poor business sense. But, you would have bought it at IPO if you knew where it could end up. There are many more artists than stocks, so we must be selective about which artists, genres and prices are most viable in the long-run. Presently the lull has given investors incredible opportunities to “buy low” by discovering emerging artists, locating undervalued secondary market properties and reinvigorate markets with the purchases of these items. While not every person is in a position to do this, there is a large population who are. However, many are taking a “wait and see” approach to major purchases despite their own financial security. These are precisely the people who need to be spending now on goods and services in order to buttress the economy. The arts, as we saw during the Great Depression, were a major focus in the development of a national identity, and re-stimulation of the economy. Artists such as Thomas Hart Benton, Mark Rothko, Arshile Gorky, Paul Cadmus and others who are now featured works in the auction houses, were fostered during this period.