Passion is a popular emotion these days. We are encouraged to be passionate about our careers, our hobbies, and even our ideas. Like most popular ideas, this one is mostly wrong. On the risk/reward scale, it ranges between dumb and dangerous. But there are some noteworthy exceptions.

One of them is art. Let’s talk about that.


Why It’s Okay to Fall in Love With Your Investible Art* 

“They say you cannot argue taste. Of course you can. It is one of the most rewarding conversations two people can have.”– Michael Masterson

When investing in real estate, it’s generally a bad idea to become emotionally attached to what you are buying. When considering the purchase of a rental property, for example, you should determine what to pay for it by studying market rates for “comparable” properties in the area, not by some subjective feeling about how “cute” the place is.

The same is true for stocks or precious metals or digital currency. Buying and selling decisions should be based on market metrics. Innumerable studies have shown that when investors fall in love with individual assets or asset classes, they tend to do poorly in terms of long-term gains.

It also makes sense for art investors – especially new and amateur investors. If you want to give yourself the best chance of getting optimum, long-term returns, you should make your buying decisions based on verifiable data, not on how much you love the piece.

That goes against the most common advice art brokers and dealers give their clients: Buy what you love.

They do this for two reasons:

When a buyer loves a work of art, he is much less likely to be critical of its value. It goes like this:

“I love that!” he exclaims.

“You have great taste,” the broker assures him.

“How much is it?”

“It costs $X. But it’s a great piece and a good value.”

So that’s reason number one. When the buyer loves a piece of art, it’s easier to sell it to him.

The second reason is that when an investor loves a piece of art, he’ll be more likely to keep it. His attraction to it was validated by the broker. (“You have good taste.”) And his decision to buy it creates what psychologists call confirmation bias. (He wants to believe he made the right decision.) So if, in the future, the investor discovers that the piece is worth less than he paid for it, he’ll be more likely to believe that the lower valuation is wrong than to question the integrity of the broker that sold it to him.

Does this mean that the art investor should never fall in love with the art he buys?

My answer is yes and no. Or, rather, no and yes.

You should not allow your love for a particular piece to influence the price you are willing to pay for it. You should, as I said, make that decision based purely on verifiable market data. But after you have bought a piece at the right price, you can fall in love with it. Because forming an emotional attachment to a well-priced piece of investment-grade art will work in your favor.

Let me explain.

When I buy investment-grade art, I am looking primarily for value. I’m looking to buy a piece that is priced at or below its current value – as determined by current auction prices for similar works by the same artist. It doesn’t matter whether I like it or not. My decision is based on the numbers, not on my feelings.

After the buy is made, I put my investment mind aside and allow myself to fall in love with the piece. And interestingly, most of the time, I find that I do.

Falling in love with well-bought, investment-grade art makes it more difficult to sell it when an offer is made. This creates a bias towards holding the art for a long time. And that is definitely the way to optimize your ROI as an art investor.

When I bought my first piece of investment-grade art, an oil painting titled Invierno (Winter) by José Clemente Orozco, I had a reasonable expectation that it would increase in value. I knew that Orozco was one of the three most important muralists of the 20th century, that his production of small oils was limited, and that the market for Mexican art was heating up.

But I also liked the image. The three figures, standing outside in the cold as if they were waiting for something, intrigued me. I liked the way the artist used quick, strong brushstrokes. I liked the somber hues.

I bought this painting in 1991 for $18,000. It’s been appraised by two of the major auction houses at between $125,000 and $150,000. That’s an average annual appreciation of 7% to 8%. But I wouldn’t sell it for twice that price because (a) it’s a rare piece (an oil painting by a modern Mexican master), and (b) it still makes love to me every time I look at it.

Let me give you another example…

I have an oil painting in my office by a Pakistani artist. I bought it almost 30 years ago from a neighbor who was in financial straits. He sold it to me for $3,000. He told me it was worth more than that. But since I didn’t know the artist, $3,000 was as high as I was willing to go.

I liked it immediately. It was a large, abstracted image of a woman seated under the outstretched hand of a man. The bodies were aqua green. The background was black. The way one figure curled around the other appealed to some tender part of me. And yet, the impression was almost stark. More like an etching than an oil on canvas. The artist’s technique – drawing into wet paint with the hard end of the brush – was new to me. I was smitten.

I didn’t know who the artist was when I bought it. And perhaps the man who sold it to me didn’t know either. Or perhaps he did but didn’t realize that he was a rising star. Several years later, he tracked me down and offered to buy it back for $5,000. I demurred. A year later, he called me back and offered me $10,000. This continued on and off until I turned down $50,000.

By that time, we both had done our research and knew its market value.

I could probably sell it today for $60,000 wholesale. Or retail it and try to get $90,000. But I haven’t the slightest desire to do so for the same reasons I’m holding on to the Orozco.

Had I invested $3,000 in a stock index fund back then, it would have been worth about $50,000 today. In this case, my emotional attachment to this wonderful piece of art has given me a profit of between $10,000 and $40,000.

One last example:

In 2008, I bought a large painting by the CoBrA artist Jacques Doucet from a dealer in Amsterdam. (See “Did You Know,” below.) I didn’t particularly like this piece at the time. Its gloominess was more than even my usually gloomy temperament could connect with. But it was a strong painting, and I felt that the price I had negotiated – $20,000 – was a good one. I bought it and installed it in our “entertainment” room, a largish room we use for parties.

In 2016, someone called my partner at Ford Fine Art and offered to buy it for $40,000, doubling my money in 8 years. That was a nice 9% annualized return. In fact, the offered price was at a  premium because the buyer “loved” the image.

Meanwhile,  I had fallen in love with that painting. I couldn’t bring myself to sell it. So I turned down the offer, and I’m glad I did. I’m happy to have that painting in my collection so I can enjoy it now. And I expect that it will continue to appreciate at 8% to 10% annually.

The point is this: When it comes to holding for the long-term, it is easy to do with investment-grade art because you do fall in love with it. But with stocks and bonds, it’s not possible to have the same attachment. Instead, you get emotionally attached to its pricing.

And that makes you a bad investor.

The financial industry understands this. That’s why brokers and the investment media bombard investors with the real-time value of their stock holdings. The moment a stock drops, the investor knows it. He sees that big red loss on his account statement. For most investors, this creates anxiety. And frequently, they rid themselves of that anxiety by selling.

But investment-grade art is less reported upon. Therefore, the value is less subject to the emotional whipsaws of investors (and computer-based investment programs). Prices change from year to year, not day to day. This reduces the ups and downs in valuations. More important than that is the fact that most art investors, like me, are reluctant to sell their art for decades.

I believe this is the main reason I’ve done as well as I have with the better part of my collection. And it’s the reason I recommend investment-grade art to anyone interested in investing in art.

Falling in love with it is not a bad thing.

You get to have your cake and eat it too.

* This series of essays gives you an advance look at a new book that I’m working on, based on my experiences over the past 40+ years as a collector and investor in fine art. 


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