"Art is the ultimate asset.” ?

[Peter G]

http://www.bloomberg.com/news/2014-11-10/early-auctions-total-673-million-as-bag-sculpture-sells.html

[Bronty]

well,that's an art collector talking.

[Bronty]

thx for sharing the article btw

[Peter G]

http://www.usatoday.com/story/news/2014/11/12/five-things-to-know-wednesday/18856361/

[Peter G]

http://www.businessweek.com/news/2014-11-12/warhol-s-elvis-brando-portraits-sell-for-151-dot-5-million

 

Two Andy Warhol paintings of Elvis Presley and Marlon Brando sold for a combined $151.5 million at Christie’s in New York.

 

“Triple Elvis,” a 1963 silkscreen of Presley in a publicity image for the movie “Flaming Star” in which he is shown as a cowboy with a gun, sold for $81.9 million. The almost 7-foot-tall work, in which Warhol repeated the image three times, had an estimate of more than $60 million.

 

“Four Marlons,” depicting four identical images of a young Marlon Brando wearing a leather jacket and a cap in a still from the movie “The Wild One,” fetched $69.6 million. The 1966 work, which is 6.75 feet high, also had a $60 million estimate. Prices include commissions; estimates don’t.

Story: Batman Stamps: Collectors Say Despicable, USPS Says Brilliant

 

Christie’s postwar and contemporary art sale is continuing.

[AKA Rick]

It's not the ultimate asset because you still need to find your buyer to realize the price to then cash out.

 

It's a good investment from the standpoint of, if you're a fan, then you can enjoy the aesthetics more so than staring at stocks you own (you don't even get the certificates anymore and it's just an online list of names and numbers), but at least with stocks, for the most part, when you want out, you know the price and for the most part can bail out within seconds. Where with artwork, people can estimate value, both high and low but you need to find your buyers then conduct the transaction. If you have one key piece that's easier, but if you have a lot of smaller pieces, let's say 5,000 pieces worth $300 each, it could take a long long long time to liquidate and maximize your price potential if you're selling them direct to consumer one at a time.

 

To me the ultimate asset is one you can convert with speed that retains its value (or as close to it) when you want to sell it.

[vodou]

To me the ultimate asset is one you can convert with speed that retains its value (or as close to it) when you want to sell it.

I don't disagree with you (much), but there is big tradeoff for liquidity, ROI. Forgetting the aesthetics of art, from a risk:reward standpoint equities and bonds, and especially hard currency, offer a benchmark but hardly the best ratio.

 

There's no return on hard currency (cash under the mattress, simple checking/savings account), and more likely than not negative real return against inflation. This is the most liquid 'asset' (if you can call money itself that?) but stinks for ROI.

 

Equities and bonds, take your pick anywhere, lots of risk:reward but overall more liquid yet subpar ROI against (well-chosen) art.

 

By well-chosen I mean buying out of a solid collector base with the intention of selling back into same or larger. The Warhol market would be an example of this. Only in the depths of the several art busts of the last 30 years has Warhol underperformed in a scary way. Otherwise easy to buy, easy to sell (unless it's the un-sexy off works like private portrait commissions, animals, toys, stuff like that).

 

Again looking just to ROI, (making the big 'all other things equal' assumption) there's a much better return chance on thousands of smaller $300 pieces than one or a handful of big $500,000 works. It's also more diversified. The hidden drag is the work of doing it right, but the simple fact that there are more $600 buyers than $1,000,000 results in a greater chance at doubling (or more). And there's the fact of incremental liquidity along the selling path that way too, not having to hang dry waiting months, years for that one $1m whale to float your way. Selling down a large collection of lower priced works can be it's own income stream..

[delekkerste]

Quite simply, there is no such thing as "the ultimate asset". That phrase incorrectly implies that there is an asset that is inherently the best regardless of where it's priced, which is patently false. Buying art in 1989? Bad idea. Buying art in 1996? Good idea. Buying stocks in 1999? Bad idea. Buying stocks in 2009? Good idea. Buying real estate in 2006? Bad idea. Buying real estate in 2010? Good idea. Buying gold in 1980? Bad idea. Buying gold in 2001? Good idea.

 

I offer no opinion on whether buying art in 2014 is a good or bad idea. However, regardless of when you buy it, the high transaction and storage costs and low liquidity creates a big hurdle you have to get over just to break even right from the outset, something many other asset classes don't have to face.

[vodou]

I offer no opinion on whether buying art in 2014 is a good or bad idea. However, regardless of when you buy it, the high transaction and storage costs and low liquidity creates a big hurdle you have to get over just to break even right from the outset, something many other asset classes don't have to face.

One thing is for sure, while all societies produce art, and it could be argued the best art come from the poorest or most oppressed societies...it's usually only rich societies that buy art.

 

So if you're buying or already own substantial art holdings, Question: Who will be the rich society you'll be selling art to? Will they want what art you have? This is your ease of liquidity scenario. Depending on your worldview (and more importantly what actually happens regardless of what you rationalize or believe), this may not be a US or Western centric equation at all. Something everybody should be at least consider.

[rsonenthal]

Gene is right. There is no "ultimate asset", but the quote in the article wasn't referring to ROI or liquidity. It was referring to ego and status.

 

Ron

[suspense39]

http://www.artnews.com/2014/07/07/the-2014-artnews-200-top-collectors/

 

Well here's who's buying art at the high end now

[suspense39]

http://www.artnews.com/2014/11/12/christies-contemporary-art-sale-nets-853-9-m-all-time-auction-record/

 

And the latest news

[delekkerste]

Gene is right. There is no "ultimate asset", but the quote in the article wasn't referring to ROI or liquidity. It was referring to ego and status.

 

Ron

 

“I’m long-term bullish on the art market,” Rajiv Chaudhri, president of Sunsara Capital LLC in New York and an art collector, said at the event at the Four Seasons restaurant in New York. “Prices will keep moving up. There is still so much private wealth being created. Art is the ultimate asset.”

 

Sounds like he's talking financials to me. But, in any case, in terms of ego and status, as big an art aficionado as I am, I'd still rather own a sports team than the equivalent $ worth of art if money was no object! To me, that would be the ultimate.

[Pete Marino]

Gene is right. There is no "ultimate asset", but the quote in the article wasn't referring to ROI or liquidity. It was referring to ego and status.

 

Ron

 

“I’m long-term bullish on the art market,” Rajiv Chaudhri, president of Sunsara Capital LLC in New York and an art collector, said at the event at the Four Seasons restaurant in New York. “Prices will keep moving up. There is still so much private wealth being created. Art is the ultimate asset.”

 

Sounds like he's talking financials to me. But, in any case, in terms of ego and status, as big an art aficionado as I am, I'd still rather own a sports team than the equivalent $ worth of art if money was no object! To me, that would be the ultimate.

 

Even if it was the Mets? :shrug:

[delekkerste]

Even if it was the Mets? :shrug:

 

I'd have to think about that one.

[MPS]

Equities and bonds, take your pick anywhere, lots of risk:reward but overall more liquid yet subpar ROI against (well-chosen) art.

 

But couldn't one argue that "well-chosen" equities and bonds would result in an optimal ROI beyond that from well-chosen art?

[vodou]

Equities and bonds, take your pick anywhere, lots of risk:reward but overall more liquid yet subpar ROI against (well-chosen) art.

 

But couldn't one argue that "well-chosen" equities and bonds would result in an optimal ROI beyond that from well-chosen art?

One could argue anything, but getting a positive return on either of those classes the last 35 years mostly meant just putting money in. Not so with art, where most art mostly loses, essentially the exact opposite. Art must be well-chosen (or very lucky) to begin with, just to give even money back. But typically when art wins, it does win much bigger. The same with all collectibles and other niche segments with very dedicated participants. These are areas where illiquidity can pay off handsomely (for the seller), because you can't just buy it anywhere, from any broker. And the buyers know this.

[tth2]

it could be argued the best art come from the poorest or most oppressed societies

I've never heard that argument before and doubt it's true.

 

For many years during the Myanmar junta, when it was one of the poorest and most oppressed places on Earth, they pushed art from Myanmar. The vast majority of it was, quite frankly, crapola.

 

I also don't recall hearing about all of the great art coming out of sub-saharan Africa or Bangladesh.

[tth2]

Sounds like he's talking financials to me. But, in any case, in terms of ego and status, as big an art aficionado as I am, I'd still rather own a sports team than the equivalent $ worth of art if money was no object! To me, that would be the ultimate.

The problem is that prices for different classes of assets seem to generally move in tandem.

 

At the time you could've bought a decent sports team for $100 million, you could've acquired some great paintings for much less than that.

 

And now that a great painting seems to be going for $100+ million, you can't come even close to buying a decent sports team for that amount of money. This is a world where the Milwaukee Bucks (the Milwaukee Bucks!!!) are going for $500 million.

[Bronty]

it could be argued the best art come from the poorest or most oppressed societies

I've never heard that argument before and doubt it's true.

 

For many years during the Myanmar junta, when it was one of the poorest and most oppressed places on Earth, they pushed art from Myanmar. The vast majority of it was, quite frankly, crapola.

 

I also don't recall hearing about all of the great art coming out of sub-saharan Africa or Bangladesh.

 

I was wondering about that as well. We've all seen the rise in russian and chinese art & antiques as a result of the improved economies in those countries. From what I've seen it seems to me that every nation likes its own art and that as the fortunes of that nation rise and fall, so too do the prices for its art.

 

It would never happen, but if Myanmar or Bangladesh became over the course of the next fifty years, two global superpowers, art from those countries would become valuable.