Is it advisable to invest in fine art?
There are 2 possible attitudes for an art investor to adopt.
1/ short-term return on investment
2/ long-term return investment
Making a profit rapidly is possible.
But this type of art will not be found in an auction house or a gallery. In both places professionals surround you. In galleries, owners know what they have in their hands, in auctions houses every object is scrutinized by thousands of specialists. So it is very difficult to find that unique moneymaker artwork because many are having the same goal as you. But again there are exceptions; I worked for many years for Charles Bailly of the gallery of the same name in Paris. Experts like Charles Bailly are very rare. He bought in February an Old master in Sotheby’s New York for $ 2 million and sold the same painting for $ 22 million in November the same year in Sotheby’s London.
In 1989, he bought a painting, mentioned in a Parisian auction as a school of Velasquez, estimated in the auction catalog $ 50,00, for $ 5 million at the hammer… after a long battle with a representative of the Louvre Museum. Buying an artwork a 100 fold of the estimated value is not given to everybody.
Charles Bailly is a genius and is recognized as is by all his pairs ( who aren’t jealous of him of course).
That day was the only day ever I saw Charles Bailly, expressing without retinue his joy in public and claiming he just bought a real Velasquez, executes at the begin of his career. For a return in the short term, you need to find artworks in estates sales, buying artworks directly from artists, or their heirs, in isolated areas, etc. In reality, you will find important artwork in locations where our modern communication instruments aren’t present.
The Internet is an enormous source of information and communication available to most people, but not to all of them. Cuba is one of these countries where the internet is not present everywhere.
Not everybody has a computer.
In my opinion, it makes much more sense to consider an investment in fine art as a long-term investment.
Art is an illiquid asset. If you buy a painting today it is not to sell it next week, unlikely, as you would buy stocks today and sell them in 2 weeks.
The return on investment will depend on several factors:
- The artists you invested in
- The quality of the work in comparison with other works by the same artist
- The period the artist made the painting.
- The size
- The state of conservation
- The rarity
For example, a Picasso 24” X 36” from the Blue period will be at least 10x more expensive than a Picasso 60” x 36” he made after 1958.
It is advised to buy upcoming artists. Artists with publications about their work, with at least 10 years of exhibitions on their CV, are usually very good verification systems to decide to invest in them.
Investing in upcoming artists is going to be cheaper than to invest in known artists, and available to a larger spectrum of people.
Also, an investor needs to be educated in the art business.
There are painters who are “hot” in the market today and others that were “hot” and are totally disregard today.
For example, the gentle little landscapes of the 19th century, in the after Corot style, were very hot in the US, and totally neglected in Europe.
Also, 19th paintings showing a young girl with a couple of Saint Bernard dogs are very hot in the USA, but no longer on the old continent. Avoid to invest in this type of art, it is a bubble that will explode sooner or later.
I’ll advise buying art you like because you will have it hanging on your walls for a long time.
Liking an artwork and let your emotions guide your choice is in contradiction in the choice of investment.
Personal emotions should at all-time left outside your decision.
You may like a painting and buy it, but always after homework completion.
If you don’t want to be disappointed, because the value of your painting is not going up, you need to study the painting as mentioned before or take advice from a trusted art expert.
It is too often that people come to me with art, they bought several years before and do find out that their investment is still in a negative balance because they overpaid the artwork. For example, I see often people on cruise ships celebrating their wedding anniversary and willing to have something to remember that day.
Unfortunately guided by the emotions they buy in these well organized and managed cruise events art sometimes at 10 times the real value of the art.