18 Things You Absolutely Should Know About Investing in Art

Ah, Gabriela! My middle school crush. Her father, Eric Albreicht, an eminent art critic, had lined every wall of their home with beautiful paintings.

The walls of our house were lined with books. (Books were also piled high on every surface and held up one leg of the dining room table.) My mother, a close friend of Eric’s, was an art lover too. But she could afford only reproductions.

When, some 29 years later, I began to buy art, I bought it for the love of my mother’s intelligence and for the standard of beauty that Gabriela’s father had set for me.

Collecting for love and beauty is a perfectly defensible motive. But as my purchases ran into the hundreds, I began thinking of art as an investment.

I’ve been buying art for more than 40 years. I have owned and run five galleries and have a current collection of more than 1000 pieces. And though I still buy for love and beauty, I temper my enthusiasm by following a set of guidelines I’ve developed along the way. 

  1. Art has no intrinsic value. Its value is determined entirely by the market.
  1. The most important factor in the current value of a work of art is the reputation of the artist among market insiders.
  1. The most important factor in the future value of a work of art is the artist’s prominence in art history books. Next is the importance of the museums that display his/her work. Third is the number of corporations and wealthy individuals that own it.
  1. From a value perspective, when you are buying established dead artists you are buying historical artifacts.
  1. The fine art market has very little resemblance to the financial markets. It is smaller, more controlled, and less regulated. In terms of participants – brokers, buyers, and critics – it is very small. In terms of dollar values, it is quite large. (The most recent figure I found valued the global art market at almost $64 billion!)
  1. Contrary to other assets, diversifying does not increase safety with fine art. Specialization does. It’s better to collect 100 pieces by one artist you admire than one piece by each of 100 different artists.
  1. Evaluating individual pieces of art is easier now that auction records are available online.
  1. The factors that matter most in valuation are: artist, medium, size, rarity, and style/period.
  1. Like most tangible assets, rarity and “quality” affect price appreciation. The “better” pieces typically outpace ordinary pieces by a considerable degree.
  1. As a general rule, oils are more valuable than acrylics… acrylics are more valuable than gouaches… gouaches are more valuable than crayon and ink pieces… crayon and ink pieces are more valuable than ink pieces… and ink pieces are more valuable than pencil sketches.
  1. “Buy what you like” is bad advice for the new investor. That’s because what they like is not typically what they like after they have been in the game for a dozen years.
  1. The touted 10% historic return for fine art is contrived. The actual return for most investors and collectors is probably closer to the rate of inflation.
  1. That said, if you can afford to buy “museum quality” art, it’s quite possible to earn 10% overall. I’ve done as well or better in the last 30 years. (Not so well in the first 10.)
  1. To maximize profit and minimize risk, buy the most representative examples of the best-known artists you can afford.
  1. Start slowly, investing in just one to three artists. Stay with them forever if you want. If you wish to expand your collection horizontally, move slowly.
  1. Constantly upgrade your collection. When you have the chance, sell two or three lower-quality works to purchase a single higher-quality one.
  1. Art has three distinct financial and estate management advantages: It is portable. It is transportable. And for the most part it is non-reportable.
  1. If you don’t take daily aesthetic pleasure in your art, you are missing most of its value. In other words, if you aren’t in it for love and beauty in addition to asset growth, you are better off with stocks.
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Would You Like to Start a Serious Art Collection?

“What do you think of this painting?” he asked me. “They want $250,000 for it.”

SP is a former protégé and current partner. He’s had a very successful career. He’s got a beautiful house and lots of expensive toys, but he doesn’t spend money foolishly. So it didn’t surprise me that if he was going to venture into buying fine art, he’d ask one of the few people he knew that had some experience.

The image was well done but conventional. I was only vaguely familiar with the artist. But since I knew the broker, I was pretty sure the piece was being offered at an aggressive price. So I looked up the recent history of the artist’s pieces sold at auction and saw that the painting my colleague was interested in was, indeed, seriously overpriced. I told him so. He didn’t buy it.

He sent me a note, expressing consternation at the process of buying investment-grade art. “It’s not like stocks and bonds,” he observed. “There is no transparency.”

That is partly true. If you are buying art from a dealer, you may find yourself relying exclusively on the information he provides. This gives an unscrupulous dealer, knowing how little most buyers know about art, a big advantage. Art brokers, though, usually won’t lie. It could get them in trouble. But they can and will select the facts they want to convey and omit those they would rather not divulge.

When I first went into the art business in 1989, the retail buyer was greatly dependent on the honesty and integrity of his dealer. Although there were records of auction sales, they were published in large bound volumes months after the auctions took place. Hardly anyone but art dealers and auctioneers even knew they existed.

I used those books then and they taught me a lot. Among other things, they taught me that once you understood some basic facts about valuing art, researching past sales for a particular artist could give you a very good idea of what a piece from that artist was worth.

Today, you can find just about everything you need to know about prices online. Which means you can figure out whether a particular piece is worth the asking price by doing your own research.

If you have read any of my essays on art collecting, you know that my first rule is to start small. And by small, I mean two things:

Buy just one or two artists. If you are like most people, you’ll want to buy dozens of different paintings from different periods from different artists. This is not a good idea if your goal is to become a serious collector. Buying and selling art competently requires a fair (not crazy, but fair) amount of knowledge about that particular artist. You need to know what medium he is best known for, what period is considered his strongest, what images are favored. You also need to develop an eye for the details of his work so you can spot possible fakes. You can do this in a matter of months if you focus on a single artist. Maybe two. But if you begin with a collection of a dozen or so, it will take a long time to come up to speed. And during that time, you will likely be making many costly mistakes.

Spend small. Even if you have millions sitting around with nothing to do, don’t begin by spending six and seven figures. I often advise new collectors to spend a year or two building a “baby collection.” Buying a few dozen pieces of a few dozen artists but never spending too much money on any single piece. The less you spend, in fact, the better. Why? Because I can tell you with almost 100% certainty that several years after assembling your baby collection, you’ll grow tired of it and want to start over.

That’s all good. Because the idea of the baby collection is to teach you how to buy and sell art, not to actually begin your collection. The money you are spending on those initial purchases should be viewed as tuition. You’ll learn just as much spending $50 on each piece as you would $50,000 – so why not spend less?

After you have graduated from your baby collection, it’s time to start to think about building a serious collection that will appreciate in value over time.

Start, as I suggested, with one artist. Pick an artist whose work you like and can afford. Pick one that is established – i.e., his works are part of the permanent collections of several large museums.

Most artists work in two or three media – oil, watercolor, gouache, pen and ink, and pencil. Typically, oils are more expensive than watercolors and gouaches are more expensive than pen and ink and pencil sketches tend to be the least expensive. Also, larger pieces usually cost more than smaller one.

But those are general rules. Superseding them is the quality of the image (how well rendered it is) and the type of image or period it represents. (If the artist is best known for his abstract paintings, a realistic piece will be worthless.)

For variety and to improve your knowledge you might buy one or two oil paintings, a gouache, and a pencil sketch from one artist before you move to the next.

And when you do move to the next, it’s preferable to stay close to the first artist – that is, to buy another artist from the same period or the same school. This is not a hard and fast rule, but it will reduce your learning time and possible mistakes because the guidelines that apply to one artist of a school usually apply to another.

Good art comes in all price ranges. Buying expensive, museum-quality pieces does not make you cultivated. Having a sophisticated appetite for art does. It is much more impressive to see a roomful of beautiful and unusual works by unknown artists that someone has collected over the years for pennies than it is to walk into a million-dollar living room filled with very expensive junk that has been sold and bought for prestige.

Another important point: Buy unique pieces instead of prints. Prints are like condos – they do well in good markets but tend to collapse in weak ones. It’s always better, both from a personal standpoint and from an investment point of view, to have unique, original pieces that no one else has.

The most important thing is to buy pieces you like, keeping in mind that your taste will change – and improve – as you gain experience.

As time passes, you will become an expert on the artist(s) or genre you have chosen to specialize in. You will know as much about the value of individual pieces as anyone else in the world.

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A Fun and Clever Way to Build an Art Collection

Thursday, October 25, 2018

Delray Beach, FL– If you ever want to develop a really great art collection – on the cheap – here’s a clever strategy you can use. I picked it up from an elder statesman in our industry that lived for years in Mexico and then in Paris. As far as I know, he never spent more than a few thousand dollars on any individual work. He enjoyed his collection during his life, and when he died it was worth millions.

The strategy is this: Find a location where young artists abound. It could be somewhere in the States. Or it could be overseas. Sponsor an exhibition/contest for up-and-comers, not amateurs but artists whose work has gained some recognition among gallery owners and local critics. Award three cash prizes. (Just big enough to attract a good number of entries.) It’s a juried show, and you are the judge. The rules require a contract, and the contract gives you the right to buy any of the entries at a predetermined price – a price you are happy to pay.

If it works the first time, make it an annual show. Rinse and repeat for 20 years. It will provide you with a large and worthy collection. If you have an instinct for judging, it may be a valuable collection, too.

I’m doing this in Central America. The idea is to bolster my current collection of modern masters with “emerging” talent. Suzanne Snider, my partner in Ford Fine Art, has been leading the charge. We began by sponsoring art events in the capitals of each country and got to know the players. Now we are commencing with the contests.

She recently wrote to me from Managua, Nicaragua, where Johann, our local partner, had just put on our first show:

Mark – The exhibition at the Cultural Center looks fantastic. Johann did an exceptional job… The works are significant and arranged perfectly. 

Tonight we met the new Ambassador of Spain. It was packed. At least 150 people. All the artists were there except one who is considered an activist and had to leave the country. Lots of press and lots of compliments and good feedback.

I am cutting the budget by staying in Johann’s family home… I have the upstairs master suite, the roosters crowing and the birds singing this morning. Thinking about a nice bath in the jacuzzi.  

This is fun stuff. I’m jealous of my partner. But I’ll attend our next show. If you fancy yourself a speculator and you are interested in collecting art, this strategy could put the odds in your favor.

Here are some images from the show:

 

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Art Notes

Ernesto “San” Avilés

Van der Weyden + Des San Juanes, 1969

I have more than a thousand works of art in my collection. This little painting by Salvadoran artist San Avilés is one of my favorites.

As you can see, San Avilés can display the technical skill of a classically trained master, but there are always elements in his compositions that veer from the expected. In the case of this painting (which was painted in Paris in 1969), you have a very common subject: Christ being lowered from the cross. However San Avilés’version – sensual and rich in religious symbolism but without any apparent dogmatic intent – is far from traditional.

It sits on an étagère in the billiard room outside my gallery office. It is surrounded by many larger and more imposing pieces, but it seldom fails to catch my attention when I step into that room. And when I see it, it pleases me.

Browsing visitors notice it too. I like to watch how their expressions change as they take it in. The technical mastery of the composition itself draws them to it, and the subject matter makes them think for a moment that they are looking at a Renaissance painting. But then the bits that are missing – figures to support Christ’s body and the face of his mother – tell them they are looking at a post-modern painting. One unlike anything they’ve seen before.

Or such is my interpretation of their expressions.

San Avilés is one of more than 30 modern masters featured in Central American Modernism / Modernismo en Centroamérica, a book I have been working on for nearly 10 years.

For more information on the book, contact Suzanne Brooks Snider: suzanne@rojasford.com; (561) 512-2467

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Arturo Pacheco Altamirano

Oil on masonite, 1966

By Arturo Pacheco Altamirano (Chile, 1903-1978)

Arturo Pacheco Altamirano was one of the most recognized Chilean artists of the 20th century. His paintings of ports and marinas illustrated the universal appeal of life in coastal environments.

Early in his career, Altamirano had exhibitions in Chile, Argentina, Peru, and the United States (Washington, D.C., and New York). He made the leap to Europe in 1952 when he was appointed cultural attaché at the Chilean Embassy in Paris. While in France, he met other artists and was introduced to the European avant garde scene. What he saw – everything from Impressionism to Cubism and Surrealism – was reflected in his later work.

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Karel Appel

1962, oil on canvas, 45” X 35”

It looks like scribble scrabble, I know. And to be honest, it’s not a favorite of mine. But it’s been a good conversation piece (What is that?!) and a good investment, doubling in value since I bought it years ago.

The artist is Karel Appel, a Dutch painter and sculptor who cofounded a “school” of northern European expressionists called COBRA. (An acronym for Copenhagen, Brussels and Amsterdam)

Appel (you can pronounce it like apple in English since it means apple in Dutch) attended the Royal Academy of Fine Arts in Amsterdam from 1940 to 1943, moved to Paris in 1950 and then to New York City in the 1960s and then lived in Italy and Switzerland later.

The COBRA movement was, like Expressionism generally, a reaction against the “sterile academicism” of traditional art at the time. Its style was influenced by folk art, naïve art, l’art brut (Jean Dubuffet) but most importantly (in my view) children’s art. In America artists doing this sort of thing were called action painters.

I have other works by Appel that I like a bit better. Like this one they are characterized by a thick layering of pigment, rushed, almost violent brushwork and a childlike figuration, but they are a bit less gloomy than this one. But those are later works, which don’t fetch the prices that painting in the 1950s and 1960s get. Also this one is registered in the Archive of the Karel Appel foundation, which makes the provenance impeccable.

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Carlos Merida

Of all the Central American masters, I think Guatemalan artist Carlos Merida (1891-1985) is the quintessential Modernist. He traveled to the US and Europe early in his career and met with many great artists. He also worked with the Mexican muralists. And he was probably the first Central American artist to integrate the lessons of Modernism and indigenous themes in his paintings. In this drawing, you see his most recognizable images: geometric abstraction with a slight figuration. More importantly, you see the textiles and the colors of his country.
This small, colored pencil, 8″ x 6″ on vellum, Cuatro personajes, is valued at $8,000. It was done in 1970. Recently an earlier work, a 1945 painting, sold for $150,000. Merida’s paintings from the 1970s typically sell for $85,000 to $100,000.

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Sofia Bassi

Not as well known as many of the Mexican women Surrealists, Sofia Bassi (1913-1998) has an interesting story. She spent five years in prison for the murder of her daughter’s husband, which was, supposedly, actually committed by the daughter. She continued to paint during her incarceration with the help of many important Mexican artists, including Jose Luis Cuevas and Rafael Coronel. She is also known for her collaborative work with the CoBrA artist Asger Jorn.
This painting incorporates the visual “egg” she used frequently to symbolize rebirth and/or fertility. El Hombre Leyenda (Man of legend), 1991, is oil on masonite. The egg of the eye is repeated in the sky.  A closer look reveals two angelic clouds floating there, too. The current value is $15,000.  A similar larger work recently sold for $24,000 and a painting she did with Jorn is valued at $35,000-$40,000.

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Shotgun Hospitality

Frederic Remington   1861-1909

Many of Remington’s best-known paintings depict scenes of action: hunting, fighting, warfare. The subject matter of Shotgun Hospitality is more subdued. We have three Indians standing around a seated cowboy who sits smoking in front of a campfire. They all seem relaxed, as if the Indians have stopped by for a visit. What I like about this painting is the arrangement, the circle around the campfire, the way the artist depicts the light emanating from the fire, the red of one Indian’s robe, the green on the wagon, and the dusky forest in the background against a beautiful starlit sky.

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ROBERTO MONTENEGRO
 1885 – 1968

THE MINOTAUR IN HIS LABYRINTH

Montenegro was a muralist, a painter and a graphic artist. He referred to himself as a “subrealist.”  Many of his early paintings had elements of fantasy, but his later works were entirely surrealistic, often with literary references. In this 1967 oil painting on canvas, El Minotauro en su Laberinto, the head of a red bull rests in the window of a theatrical setting made up of sturdy walls. The blood moon (symbolic of change) shines full with an illuminating halo around it. A red cape and sword lie on the blood-red ground. A labyrinth icon is displayed on one wall.

 

 

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