Provenance, Provenance, Provenance!

This painting, just sold at Christie's in London, practically gushes provenance. Borrowed from the French, the word serves the art world as a posh term for "a record of ownership of a work of art or an antique, used as a guide to authenticity or quality." 

Though this artist wasn't a big name in the art world, he was a big name. Winston Churchill painted Tower of the Koutoubia Mosque after the 1943 Casablanca Conference and gave it to Franklin D. Roosevelt.  In 2011 Brad Pitt bought the painting from a dealer and gave it to the seller, Angelina Jolie.

Expected to sell for perhaps $3 million, the only painting Churchill created during WWII sold for almost four times as much: $11.5 million.

World War II history, Churchill and Roosevelt, Hollywood stars …what more could the unidentified buyer ask?

Art for Our Unhealthy Times

 Six or seven years ago, prankster artist Banksy messed around with a painting by Damien Hirst to create this collaborative work. Today the painting serves as a pointed commentary on our Covid 19 crisis. Art is more than just a financial asset.

Nevertheless, at Sotheby’s October 28th auction of contemporary art, the Banksy-Hirst creation is expected to sell for two or three million. 

Lights! Camera! Online Art Auction!

          FRIDA KAHLO | CONGRESO DE LOS PUEBLOS POR LA PA

Maybe art collectors' estates won’t have to borrow to pay the tax bills after all. Sotheby’s venture into online auctions shows promise. Yesterday's evening sale, which I watched, was a fascinating attempt to evoke live auction excitement. The auctioneer, animated as an orchestra conductor, faced three giant screens – New York, London and Online. Each screen displayed ranks of Sotheby’s employees relaying bids. Key bid takers got close ups as they proxy-dueled for paintings.

The sale offered 32 items, including lesser works by Picasso. Although six artworks did not sell, several fetched more than expected. The Frida Kahlo above, estimated at $500,000 or so, went for $2.66 million.

Elder Abuse for Art and Profit

Elder abuse is usually either physical (neglect and mistreatment) or financial (emptied bank accounts, purloined securities).

In the case of creative artists, there's a third possibility. Reports regarding two celebrated names in the art world, both of whom gained celebrity in the age of Make Love Not War, suggest that abuse may consist of seeking to profit from an artist's name and reputation – his brand.

Robert Indiana's "Love" first appeared on a 1962 Museum of Modern Art holiday card. Recreated  in paintings and sculpture, it became an immensely popular icon of the 1960's. Indiana, however, found celebrity uncomfortable. Eventually the artist fled from the pressures to commercialize his work by retreating to Vinelhaven, an island off the coast of Maine. There he died in May of last year, frail and isolated at the age of 89.  

In his final years Indiana appeared to lose his distaste for commercialism. A new work

resembling his Love sculpture appeared on the cover of a wine magazine. A giant sculpture of the letters BRAT showed up in front of sausage factory.

Last winter the NY Times reported that a company owning rights to sell designs based on "Love" has gone to court, accusing the artist's caregiver and an associate of "taking advantage of Mr. Indiana’s advanced age and isolation on a remote island off the coast of Maine to produce a bunch of inauthentic works that they sold under Mr. Indiana’s name."

In August, the executor of Indiana's estate, his former lawyer, charged the caretaker had stolen many artworks and more than $l million from Indiana while allowing the wealthy artist to live in squalor and filth.

Peter Max created trendy psychedelic posters for the Make Love Not War generation.
His works seemed to be everywhere, partly because his style was widely imitated. Although Max is now an octogenarian suffering from Alzheimer's, his artistic output appears undiminished. His studio, run by his estranged son and associates, produces Peter Max works that sell briskly on cruise ships – so briskly that one cruise ship is itself adorned with a Peter Max design.

But cruise passengers may be buying works that are Peter Max in name only, according to the Times:

The scene played out for years. Twice a week, in the late afternoon, above the Shun Lee Chinese restaurant on the Upper West Side of Manhattan, a creaky elevator would open, and out would step an elderly man. Thin as a rail, with a sparse mustache, he would sometimes have little idea about where or who he was. A pair of security doors would buzz unlocked once surveillance cameras identified him as the artist Peter Max.

Inside, he would see painters — some of them recruited off the street and paid minimum wage — churning out art in the Max aesthetic: cheery, polychrome, wide-brushstroke kaleidoscopes on canvas. Mr. Max would be instructed to hold out his hand, and for hours, he would sign the art as if it were his own, grasping a brush and scrawling Max.

Nevertheless, sales of works signed Max continue, aboard ship and on land.

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Putting an ailing artist's name on works made by others and sold for profit certainly seems abusive. Yet in today's art world, who knows? 

Artist Damian Hirst (remember his shark in a tank?) happily admits that only a couple of dozen versions of his "Dot" paintings were created by him. To meet perceived demand, he had his assistants turn out more than a thousand more.

Are Both Hawaiian War Gods Worth Millions?

Unlike regular investments – stocks, ETFs, bonds – alternative investments such as art can be difficult to value. Perhaps that's why they're alternative investments.

Current illustration: doubts about the value of a wooden statue bought at a Christie's auction by billionaire Marc Benioff for about $7.5 million and donated to a Hawaiian museum.

Is Benioff's purchase, at left, the equal of the similar statue in the British Museum at right? Or is it "the sort of thing you see in a tiki bar"?

Happy Thanksgiving

We borrowed this image of a Currier and Ives print,  G. H. Durrie's "Home for Thanksgiving," from a Yale Art Gallery post. Durrie was a Connecticut artist, born in Hartford in 1820. He died in New Haven, where he had a home on Temple Street, in 1863. That year Currier and Ives published two of his winter scenes. They became popular (nothing like death to enhance an artist's career) and Currier and Ives reproduced six more Durrie paintings.  "Home for Thanksgiving," issued 150 years ago, was the last.

Art Appreciation

Approximate sales prices for a damaged, heavily restored painting now considered to be the work of Leonardo da Vinci:

1958

$125

2005

$10,000

2013

$80,000,000

2014

$127,500,000

2017

$450,000,000

Sources: Washington Post, The Wall Street Journal, The New York Times

What $150 Million Will Buy

Roy Lichtenstein’s “Masterpiece” (1962)

To raise money for a philanthropic fund aimed at shrinking the alarmingly high percentage of Americans who spend time in prison, the president emerita of the Museum of Modern Art has sold her prized Lichtenstein for $150 million ($165 million including fees).

The buyer: Steven A. Cohen, the once-and-future hedge fund tycoon. After scraping past insider-trading charges but being temporarily sidelined from the hedge fund business, Cohen's next masterpiece will be a new, $20-billion hedge fund to be launched next year.

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? 

A Better Store of Value?

Monets and Warhols stowed in free-port warehouses serve as stores of value for the world's superrich. But where's the fun in owning art you can't look at?  Rare stamps have long served as a superior form of tangible wealth – easy to store, easy to hide, easy to carry across national borders.

“Stamps have a parallel quality to fine art," says Charles Hack, who collects both. Like art, rare stamps sometimes have noteworthy provenances.

The inverted Jenny, for example. This now-famous stamp was the Bureau of Printing and Engraving's second attempt to print postage in two colors, The first try hadn't gone well. Printing of the Jenny apparently went better, except for mishaps where the plane was printed upside down.

Colonel Green

Purchased by a prescient collector for face value, a sheet of 100 inverted Jennies passed to Colonel Edward H.R. Green, son of Hetty Green, The Witch of Wall Street. After numbering the stamps in pencil, 1 to 100, the Colonel separated the sheet into 25 sets of four.

In May one of the inverted Jennies sold for $1.35 million. Another, shown above, recently turned up in a stamp collection that an Irishman inherited from his grandfather. Thanks to Green's numbering, it was identified as one of a set of four stolen from an American Philatelic Society convention over 60 years ago.

Instead of a seven-figure bonanza at auction, the Irishman has to settle for a $50,000 reward.

At Schwab, Art and Investing Don't Mix

As you read here, artist-investor Sarah Meyohas came up with the idea of trading the stocks of small, thinly-held companies and charting the resulting fluctuations in share price as paintings. She set up a TD Ameritrade account for the project but used her Schwab account for her first painting, Paradise INC. 

Schwab, Felix Salmon reports, was not amused. It has cancelled the artist's account.

Art – the “Investment Asset” That's Easy to Fake

Can you tell a painting by Rothko, worth many millions, from a fake, one of the forged works sold by Kneoedler Gallery?

The second painting is the forgery, and it was good enough to fool the chairman of Sotheby's. Domenico De Sole and his wife paid over $8 million for the fraudulent asset in 2004. They just settled their suit against Knoedler's.

The Art (Literally!) of Investing

Sarah Meyohas, “Liberty Bancorp Inc. on January 14, 2016."

Sarah Meyohas studied finance at Wharton and fine art at Yale. The New York Times reviews her exhibit in which she combines her two interests. Daily Ms. Meyohas sits at a desk and invests, moving in and out of a thinly traded stock. Then she sketches the stock's price changes on canvas.

Before you laugh, consider that her painted charts sell for $10,000 each. 

Should the Fed Declare the Party Over?

Is the U.S. economy healthy enough for the Fed to raise short-term interest rates from practically nothing to nearly nothing? The pundits' answers are"Yes," "No," "Maybe," depending on the day of the week.

We raise the question mainly as an excuse to introduce you to the artistic creation above. The art mania isn't limited to works on canvas. Installations such as this are much admired, though difficult to store in a free port, much less hang on the wall.

Created by two Italian artists, Sara Goldschmied and Eleonora Chiari, their post-party scene refers to the corrupt high life of Italy in the 1980s. The artwork made news because a museum cleaning crew swept it up and threw it away.

The work's creators were not amused: "It cannot be possible for an installation to end up in the rubbish bin.”

Art as Asset Class: the New Gold?

High-priced artworks used to be collectibles. Now they're a red-hot asset class. Is the booming art market a bubble, inflated by speculators flipping paintings, that's about to burst?

Not necessarily, writes Peter Schjeldahl in The New Yorker. He cites an article by J. J. Charlesworth, a British critic who believes the very rich won't panic. Art is merely one of their alternative assets. a minor fraction of their wealth.

Indeed, today's global billionaires may see art not as a speculation but as the new gold.

[T]he most intriguing motive for the rampage of collecting involves a term unfamiliar to me: “store of value,” having nothing to do with a type of retail outlet. It is about liquidity that is vested rather than invested, and it speaks to dread. Besides being something that people buy when they already own everything else, art shares with gold and diamonds the desideratum (lacked by real estate) of being portable. Charlesworth observes that “alongside global prosperity has come a lot more political instability, and it’s in the interests of the social elite to keep their options open as to where they relocate.”

Your van Gogh is thus the equivalent of a packed suitcase kept under the bed against the morning of a telltale noise from the street outside.

Stores of value should be durable, like gold. Today's hot artworks? Maybe not so much. Consider the gilded beer carton.

Budweiser carton gilded by Danh Vo.

The carton was recycled and gilded by Danh Vo, an "early blue chip" artist popular with flippers. His unique artwork got pictured in The New York Times because Vo has a dispute with Bert Krenk, a wealthy Dutch collector. Krenk commissioned Vo to create an installation, perhaps along the lines of this one.  Vo provoked a legal battle by instead offering nothing but the Budweiser carton.

Do you think the corrugated paper box will last long enough to become an icon of our new Gilded Age?

Art Investment Sells for $179.57 MIllion.

Picasso's "Les femmes d'Alger (Version 'O')," above, sold at Christie's for a hammer price of $160 million. Christie's fees bring the total cost to $179.57 million, a new record.

In 1997 the painting sold at auction for $31.9 million. In another 18 years, assuming the same rate of appreciation, the Picasso should fetch $800-900 million. In twenty years, maybe a billion!

Will art as an asset class really perform that well? For billionaires, borrowing money to purchase art costs next to nothing these days. Even semi-billionaires may find lenders willing to consider art as collateral. But sooner or later the flow of easy money is likely to slow. What do you think?

Update: Later media reports put the total price at 179.4 million.

Art as Hot Investment (Again)

ANDY WARHOL, Dollar Signs $ (9), 1982

 The hot new asset class, The New York Times Magazine observed recently,  is art.

The wealthiest Americans have grown wealthier since the Great Recession, and many are investing their wealth in art. Especially with bonds and other assets offering rock-bottom yields, the art market — where reports of record-high sales now emerge regularly — has an obvious appeal. According to a survey last year by Deloitte and ArtTactic, an art-research firm, 76 percent of art buyers viewed their acquisitions as investments, compared with 53 percent in 2012.

To meet perceived demand, art marketing has gone digital, with online auctions and web sites offering "quotes" on investable works.  Thanks to high-tech depositories and storage facilities, today's art investors need not make physical contact with the artworks they trade. Better yet, they can replace one art asset for another without worrying about tax on capital gain. Like real estate investors, they can defer taxes by swapping one "property" for another.

Art investors do have a few nagging worries. Expected profits may vanish if an investor in contemporary art doesn't have an informed feel for value, and one court says that's the investor's loss. Also, tax-deferred swaps are getting too popular. The IRS is taking notice.

Biggest worry: investment fads are too good to last, and art is no exception. If you're not elderly enough to remember the last boom and bust, see this 1993 Times story: What's the Worst Place To Keep Art? A Portfolio.

Paul Gauguin, From Wealth Manager to Destitute Artist

At age 23, Paul Gauguin started a successful career as a Parisian stockbroker. He fell in with the arty set, including Pissarro and Degas.

If Gauguin didn't invent the midlife crisis, surely he perfected it. In his late 30's he abandoned his job, his family and middle-class life to become an artist. Economically, it was downhill all the way. Only after Gauguin's death in 1903, sick and destitute in Tahiti, did his paintings become prized.

Fast forward to 2015. One of Gauguin's works, painted during his first stay in Tahiti, just changed hands at a price higher than any other painting is known to have fetched: nearly $300 million!

What do you suppose the wealth manager turned artist would have made of that news?

This Gauguin sold for a record price of almost $300 million.

Art in Lieu of Taxes: a Slide Show

This masterpiece by the Venetian Francesco Guardi,
 accepted in lieu of inheritance tax, now hangs in the Ashmolean.

From the estate of artist Lucien Freud,

this work by Frank Auerbach was worth 

£16.2 million in payment of tax.

Winston Churchill's paintings aren't the only ones to be used as a money substitute when paying UK death tax.

As this Telegraph slide show illustrates, many masterworks – and some not so masterly – have helped Brits and their estates meet outsize tax bills.

Could the UK "in lieu of" system work for the IRS? Would it be more workable of contemporary works of volatile or uncertain value were excluded?

Bunny Mellon’s Awesome “Alternative Investments”

Sotheby's went all out to market the sales of Bunny Mellon's art, jewelry and home furnishings. The effort has paid off.

Mrs. Mellon's art sold for $158.7 million, well above estimate. Last evening the sale of her jewelry and other interesting objects began. Prices often exceeded estimates by two or three times.

An apple-tree brooch crafted for her by Verdura was estimated at around $3,000. It sold for $26,250.

Said to be even bluer than the Hope Diamond, her magnificent blue diamond pendent sold for more than twice its estimate, fetching $32,645,000. (Prices include buyers premium.)

Bunny Mellon, an heiress twice over, surely had a good eye for
valuable objects. But I bet she never bought for investment. The old advice about profiting from art and collectibles – buy and hold what you like – still applies.