A New Kind of Asset

Art is an asset.  In more ways than one.  If I could have things my way, everyone would be a collector.  Let me explain.

What does art do?  It makes you ask questions.  Most of the artwork we see, we don’t rationally understand, it is after all, art.  What motivates us to delve deeper into finding understandings about art is based on our gut.  The piece that pulls us the most, from an emotional or aesthetic point of view, is what gets our undivided attention.  So with this curiosity a collector is compelled to do research.  Research into the artist, their life, their story, their interests, their galleries, their representatives, and finally their reputation.  To be wise, a collector must understand who this artist is, what they come from, where they hope to go, and who else might be helping them.  With this information in hand, the collector can then make their best educated guess, or take the best risk. Using emotions to start an investigation process and rationality to top it off, the collector must decide if this artists work has a high chance of increasing in value in the foreseeable future.  Art investments are not intended to be for “flipping.” Instead, they are intended to be long term purchases that bring aesthetic joy to the buyer, and hopefully long term paybacks.  Art is a personal asset because it encourages due diligence, and exploration of the unknown.  It is an opportunity to learn unexpected things in unexpected ways.  Hey, it might even be called fun. 

Art is also, from a more traditional stand point, a financial asset.  The tricky thing about this fact is that getting just access to art as a financial asset is expensive.  To even enter the art market to attempt to make some money can require upwards of a $10,000 initial investment.  To take the kind of financial risk on something such as an art object means that a person is comfortable with loosing large sums of money.  How many people do you know comfortable with that?  Keeping that part aside though, lets think about what makes the art market a unique, and particularly challenging opportunity for investors.  First off, the market always changes because it is driven by personal tastes and trends.  Art is wanted when it is fresh and new.  Unless we are talking Old Masters here, the style de jour changes pretty unpredictably, and an investor needs to know what is a has been, and what might be a new interest.  What might be cool in the future is what he or she uses to make his or her purchases.  So an ear to the ground is an absolute must.  Secondly, art will always be in demand.  On the more sociological side of things, I cannot imagine a culture at large ever being sick of producing things that represent itself.  Or, when will a museum not be the ideal place for a foreigner to get an initial sense of a new culture they have traveled to?  When will a thriving creative cultural district not be appealing to a country’s tourism initiatives?  The reality is this: we all want art.  And finally, art diversifies ones investment portfolio.  It is a way to place money (in the form of paintings) that not only gives you the chance to make money from your money, but also gives you the added bonus of prestige and social flare. 

So art is an emotional and financial asset.  What could be better?  And what I find kinda cool about the whole thing is that the wealthiest of the wealthy are buying up objects produced by the very people (artists) who are notorious for being some of the poorest individuals (lets be honest, how often have you heard the term “starving artist”?).  There is a large gap here.  Two types of people that exist on opposite ends of the spectrum are connected through the art market.  Might there be even more we could do with this connection?     


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