Wednesday, May 31, 2017

Art as an Investment Class? It's Tricky

This Basquiat painting of a skull just sold at Sotheby's for over $110 million. Wow! Maybe investors really should regard art as an asset class, along with junk bonds, private equity and such.

But as White House advisers Jared Kushner and Ivanka Trump have learned, the notion of art as a serious wealth component can have unintended consequences. The other day they got criticized for failing to declare their art collection as a financial asset on the disclosure forms required for government work.

Conservative investors and their advisers may prefer to follow Northern Trust's advice and think of art collections as more akin to a second home or a yacht-charter business. Adam Lindemann. a prominent collector, blames the "art as investment asset" movement on the proliferation of art advisers: "There are almost as many of them as yoga instructors."

Lindemann's advice to investors? Buy art for art's sake.
Back in 2005, I asked Larry Gagosian if he believed art was an investment. He answered laconically: “Art is an investment, but that doesn’t make it a good investment.” At the time I thought his response was genius, but I’ve now changed my view, because investing requires cold analysis and objective thinking, and there’s no art in that. Art collecting is a different thing, it requires interest, patience and hopefully some passion, or at least intellectual curiosity.
What do you think? Will somebody ever be willing to invest more than $110 million in that skull? 

1 comment:

Jim Gust said...

I would not give you 110 pennies for it. The art world has officially jumped the shark.