The current downturn of our economy is a problem for many investors. Workforce cuts are growing, and several big-name reliable companies in the stock market (at least for the last century or so) are now crumbling.
This recession has completely changed the playing field when it comes to investments. Commodities that were not considered viable stock in the past are slowly gaining attention, and some people are even looking at investing in art.
Tips for art investors
Colleene Skinner is an appraiser for PBS’s popular TV program, The Antiques Roadshow. She looks at more than 10,000 paintings a year, and provides tips for those who are thinking about investing in art during this recession:
1. Educate yourself
Discover not only what you like but also art as a whole. Take a course in art history—get to know the famous painters and the various art styles. The more knowledge you have, the better your decisions will be regarding what is popular and what will hold its resale value.
2. Watch for local talent
Many skillful artists are studying with fine teachers and producing good work but have not yet made a name for themselves. Regional markets are doing well with paintings.
3. Buy the best you can afford
Look for the highest quality and stay away from art work that looks worn and tired. No matter how good the deal is on a piece, pass it up if its in bad condition.
Like all other investments, when you buy a work of art, time is a critical factor. You must keep it for a certain amount of time in order for its market value to grow.
How the economy affects the art world
The international financial crisis has undoubtedly affected the field of art. For instance, the annual art fair in Cologne had fewer booths of artists exhibiting their work in 2009.
According to a recent article in the Deutsche Welle (an online German media portal) some gallery owners were still optimistic.
Franz von Salis, for example, had a still-life by Max Ernst for sale at $1.7 million, yet still hoped to find a buyer.
“I think the art market has a good chance because it’s the first time in the history of artwork that it’s being thought of as a real investment, like real estate,” he said.
Even with that optimism, there is still a sense of uncertainty when it comes to the sale of paintings this year. Everybody is holding their breath.
Opportunities under dire circumstances
One interesting attribute of recessions is that popular pieces of art—which may have been off the market for years—are now becoming available again. A sudden shortage of cash in many businesses has caused owners to liquidate possessions in order to keep their doors open.
Anyone willing to do a little detective work will find that hard times have always squeezed out valuable art pieces at affordable prices.
One notable example was when Arthur Andersen, the accounting firm involved in the Enron scandal, transformed part of their Chicago offices into an art gallery in 2002 and sold more than 2,000 art pieces in five days.
In 2006, New York broker Refco Inc., which had filed for bankruptcy protection the previous year, sold 321 photographs for $9.7 million at Christie’s auction house in three days.
So which is better - buying art or stocks?
The good news is, art has withstood the tumultuous economic situation so far. It has been competing with (and sometimes beating) stock market returns.
Beautiful Asset Advisors, a firm which specializes in art investments during times of recession, says the level of art buying is on par with the art frenzy of the mid 80’s.
However, it’s always true that investing in art during a recession should be approached cautiously, without taking anything for granted. You could buy an extremely beautiful art piece to add to your collection, but if it does not appeal to future buyers, it will be a fruitless investment.
And that, of course, is the reason that smart collectors stress the importance of purchasing art for aesthetic purposes first, and value—or investment—second.
Donovan Gauvreau is an art historian and art therapy speaker. You can read more of his articles at www.AaronArtPrints.org.